Nizan Geslevich Packin

Volume 74, Issue 2, 349-398

According to studies, money is a major source of anxiety for most Americans. In looking for ways to remedy the source of such anxiety, some believe that increasing children’s financial orientation could help lower their money-related anxiety levels as adults. Identifying this market as a business opportunity—and reassured by research that shows that by age six, children are already veteran consumers of mobile apps—financial technology (fintech), decentralized finance (DeFi), and even traditional financial entities have started offering services and products to children. These services and products include a broad array of financial-related products and services, from enabling children to earn money for doing their chores, to trading stocks and cryptoassets, and even to earning digital assets and currencies while playing video games.

The potential of this new market’s clientele is valuable for two reasons. First, having more customers is always a good thing. Second, children will eventually mature into adult customers who presumably will continue using the services and products they like and are familiar with. And, although some legal challenges are associated with children—who are minors—entering financial-based online contracts, this business trend will continue to grow as it becomes socially acceptable to offer financial services to children. 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 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 disruptive effect on children, both developmentally and behaviorally, similar to that of other consumed digital content. This disruptive effect should be a source of concern to anyone focused on investor and consumer protection, including regulatory agencies like the Securities Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA), which have already expressed concerns over gamification and digital engagement practices. In light of “the financialization of everything,” this Article looks to both legal and ethical reasoning and behavioral economics tools to call for 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. These policies should guide lawmakers in regulating fintech and DeFi apps and games offered to children in light of the following considerations: (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) 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 young parents, who are already struggling to constantly supervise their children’s online activities, to monitor their children’s online financial activities in our digital era.