Children and FinTech

Financial technology (FinTech), decentralized finance (DeFi) and even traditional financial entities have started offering services and products to children that include a broad array of financial-related products and services – from enabling children to earn money for doing chores, to trade stocks and crypto assets, and even get digital assets and currencies for playing video games. The potential of this new market’s clientele is valuable, although some legal challenges are associated with children, who are minors, not only entering into financial-based contracts but also doing so online, this business trend will continue to grow as offering financial services to children is becoming socially acceptable. Society’s newly adopted paradigms for describing, understanding, and shaping children’s rights, domestic relationships, custodial status, and even digital purchasing power are all supportive of this trend. Moreover, FinTech and DeFi financial apps and games can help teach children about the value of money, the importance of investing, and the risks involved in trading. 

Yet, FinTech and DeFi apps and games could also have a developmentally and  fbehaviorally disruptive effect on children, similarly to other consumed digital content. Moreover, they should be a source of concern to anyone focused on investor and consumer protection. Given “the financialization of everything,” using legal and ethical reasoning, and behavioral economics tools, this research focuses on the search for effective financial literacy education for children to be replaced by a search for policies more conducive to good consumer and investor protection outcomes, which should guide lawmakers in regulating FinTech and DeFi apps and games offered to children in light of: (i) the addictiveness of digital gaming; (ii) how gamifying finance makes it feel less serious; (iii) the connection between gamification and gambling; (iv) how children’s financial choices are more susceptible to the influence of outside parties than are those of adults; (v) the FinTech and DeFi apps and games’ failure to teach children the importance of concepts such as debt, credit, and financial commitments; and (vi) the unrealistic burden on parents who already struggle with the need to constantly supervise their children’s online activities, in our digital era, by expecting them to monitor their children’s online financial activities.