Crypto is going mainstream, and the world’s younger generation, in particular, is taking note. Cryptocurrency exchange Crypto.com recently predicted that crypto users worldwide could reach 1 billion by the end of 2022. Further findings show that Millennials — those between the ages of 26 and 41 — are turning to digital asset investment to build wealth. For example, a study conducted in 2021 by personal loan company Stilt found that, according to its user data, more than 94% of people who own crypto were between 18 and 40.

Keeping children safe

While the increased interest in cryptocurrency is notable, some are raising concerns regarding the ways those under the age of 18 are interacting with digital assets. These challenges were highlighted in UNICEF’s recent “Prospects for children in 2022” report, which examines the impact that global trends may have on children, including concerns around the mainstream adoption of cryptocurrency.

Melvin Breton Guerrero, policy specialist for UNICEF’s Office of Global Insight and Policy, told Cointelegraph that he wrote the section of the report on digital currencies. According to Guerrero, this portion of the document is highly relevant because the cryptocurrency industry is still developing and, therefore, requires child safeguards:

“We need to take steps to prevent harm to children that could occur by third-parties engaging with cryptocurrency or from self-inflicted harm. As such, we need to prepare children under the age of 18 for a future where cryptocurrencies and blockchain applications are going to be a part of everyday life, just as the internet is.”

Although there are no official safeguards in place for children when it comes to accessing crypto and blockchain applications, Guerrero explained that one of the most important factors to consider is age verification. “We need to make sure that minors are not wrongly engaging with blockchain applications or misusing cryptocurrencies,” he remarked.

Given the anonymity of cryptocurrency transactions, Guerrero is aware that anyone can set up and access a cryptocurrency wallet. He added that some online cryptocurrency exchanges don’t question the age of their users. “A child can transact using various crypto wallets, and nothing can be done,” said Guerrero.

While there are technically no age restrictions when it comes to crypto, most major cryptocurrency exchanges have Know Your Customer (KYC) requirements to ensure that users are 18 or older. For example, Coinbase’s website explicitly states that users must be 18 or older to access its services. Before this policy was implemented in July 2017, however, Coinbase did allow users who were at least 13 years of age to access its services with parental consent.

It’s also interesting to note that the United States-based cryptocurrency exchange Gemini offers custodial accounts for minors. A company blog post published on Jan. 25 explains that the new service is powered by EarlyBird, a Gemini Frontier Fund portfolio company, and allows parents to invest in their children’s financial futures.

Caleb Frankel, co-founder and chief operating officer of EarlyBird, told Cointelegraph that the offering is focused on providing access to digital assets so that parents can invest on behalf of their children:

“Each account is held by a parent or guardian over the age of 18. We believe that crypto is part of a balanced modern portfolio and are prioritizing the education of families and the next generation of investors as digital asset markets mature.”

Frankel added that EarlyBird is not only working with Gemini but also proactively with regulators as well to ensure the development of a safe, secure crypto ecosystem. While progress is still being made, Guerrero commented that it’s important to ensure new wallets are always created by someone of legal age. Even though children don’t initially create the wallets, Guerrero believes this is one solution to ensure they properly utilize crypto funds.

Unfortunately, other challenges can also arise when children gain access to cryptocurrency. For instance, 2021 saw an increase in crypto scams, and children inexperienced in the sector are likely to be more vulnerable. Larry Cameron, chief information security officer of the Anti-Human Trafficking Intelligence Initiative (ATII) — an organization focused on combating human trafficking by monitoring cryptocurrency transactions — told Cointelegraph that there are many risks to consider when children dabble in cryptocurrency:

“Namely, the scams and fake platforms are risks for minors. Online predators are experts at seeking out inexperienced people and exploiting them. Data breaches, identity theft or fraud can be accomplished in the child’s name without their knowledge. Children are also more likely to lose a private key, but this happens even to adults.”

As such, Cameron believes that acquiring digital assets will make children a target for criminals. “Until crypto exchanges collectively add more verification and authentication measures when opening an account, children’s privacy will be at risk. Ideally, anyone under the age of 18 would need to provide documentation from their parents as permission to open an account,” he remarked.

Is blockchain a double-edged sword?

In addition to concerns around cryptocurrency, blockchain technology may also pose unintended consequences for minors. For instance, Guerrero explained that blockchain could be harmful to children because information recorded is permanent and immutable, and this immutability could conflict with current regulations:

“The European Union’s ‘right to be forgotten’ appears in Article 17 of the General Data Protection Regulation, or GDPR. This means that children who volunteer their information when they don’t necessarily understand the consequences should have a right when they are of legal age to have that information deleted. But blockchain, by definition, does not permit the deletion of information. So, how can we protect children’s data in this case?”

Moreover, Guerrero pointed out that while blockchain applications could help migrant children have a portable identity to access goods and services, they could also be leveraged as a form of surveillance. Given these concerns, he emphasized that there must be a balance when harnessing the benefits of blockchain technology: “Having this balance is important, and the blockchain and crypto community must keep this in mind when building new applications.”

Fortunately, some organizations are making progress on this front. For example, while UNICEF has recognized the challenges associated with digital currency adoption and children, the organization is aware that blockchain technology can be used for good.

Sunita Grote, lead of the ventures team for UNICEF’s Office of Innovation, told Cointelegraph that her office has been exploring the use of blockchain through its venture fund. “This fund provides seed funding to test open-source solutions that have the potential to accelerate results for children. Blockchain is one of the technology areas that we are exploring,” she said.

Specifically, Grote believes that blockchain-based solutions allow organizations and individuals to rethink the way problems can be solved due to their enhanced transparency, efficiency in systems and better coordination of data across multiple parties. With this in mind, Grote understands the potential that blockchain can have when it comes to responding to the threats for children in the online environment. She shared that UNICEF’s venture fund recently invested in two startups developing open-source, AI-powered solutions to address digital risks to children.

On the other hand, Grote also understands that blockchain could increase children’s exposure risk and harm online: “Being online can magnify traditional threats and harms that many children already face offline and can further increase vulnerabilities with online risks also present.”

Calling on the blockchain community to protect children

Given the risks associated with crypto and blockchain in regard to minors, Guerrero mentioned that it’s up to the blockchain and crypto community to help ensure the well-being of children moving forward. “The blockchain and crypto community must use their deeper technical understanding to actively engage with the child rights community,” he remarked.

As a solution, Guerrero thinks that blockchain applications should have built-in KYC requirements. This may be easier said than done, though, as he also believes that KYC remains an open question for crypto wallets and exchanges. Although KYC requirements may be challenging, Guerrero noted that having more educational tools will benefit the well-being of minors who are getting involved with crypto and blockchain. This may be a more realistic solution for the time being, as several educational initiatives are already underway.

For example, in 2021, Gemini partnered with Learn & Earn, an app that teaches students about financial literacy while earning fiat rewards. In addition to initiatives from exchanges, some governments are taking it upon themselves to teach youth about crypto. Last year, Colombia funded a mobile app, board game and book designed to educate young people on investing in cryptocurrencies and the stock market.

Other organizations are also developing additional educational projects. Aaron Kahler, founder and CEO of ATII, told Cointelegraph that ATII is hosting regular child safety training sessions and lectures on how to keep minors safe when engaging with digital assets and blockchain applications: “We are hosting a summit on the topic in May that will include a ‘dark webathon’ and child safety day. We are also bringing in folks from law enforcement and other organizations to speak about child safety.”