Financial Inclusion Gone Wrong: Securities and Cryptoassets Trading for Children

Hastings Law Journal Hastings Law Journal

Volume 74 Issue 2 Article 4

2-2023

Financial Inclusion Gone Wrong: Securities and Cryptoassets Financial Inclusion Gone Wrong: Securities and Cryptoassets

Trading for Children Trading for Children

Nizan Geslevich Packin

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[349]

Financial Inclusion Gone Wrong:

Securities and Cryptoassets

Trading for Children

NIZAN GESLEVICH PACKIN

†

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

†

Professor of Law, Baruch College, City University of New York; Senior Lecturer, Haifa University

Faculty of Law; Affiliate Faculty, Bloomington’s Program on Governance of the Internet & Cybersecurity at

Indiana University. Thanks to the Boston University School of Law Workshop participants, as well as the

National Business Law Scholar Conference participants for the helpful comments. Special thanks to Joseph

Aminov for his input and assistance.

350 HASTINGS LAW JOURNAL [Vol. 74:349

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.

February 2023] FINANCIAL INCLUSION GONE WRONG 351

TABLE OF CONTENTS

INTRODUCTION ................................................................................................ 352

I. IT’S ALL ABOUT THE MONEY .............................................................. 357

A. MONEY AS A SOURCE OF ANXIETY .............................................. 357

B. CHILDREN AND FINANCIAL EDUCATION AND LITERACY ............. 360

II. PLAYING WITH MONEY? ...................................................................... 365

A. FINTECH APPS FOR CHILDREN: A GROWING BUSINESS

TREND .......................................................................................... 365

B. DEFI, GAMEFI, AND PLAY TO EARN ............................................ 366

C. PATERNALISM AND SOCIAL RESPONSIBILITY ............................... 369

D. CHILDREN’S RIGHTS ..................................................................... 371

E. LEGALLY ENABLED MINORS ........................................................ 374

III. FINANCIAL INCLUSION GONE WRONG: SOME REFLECTIONS ON

POLICY IMPLICATIONS ......................................................................... 375

A. GAMIFICATION IN A DIGITAL WORLD: CHILDREN’S PHYSICAL

AND MENTAL HEALTH AND DEVELOPMENT ................................ 375

B. THE SERIOUSNESS OF MONEY ...................................................... 380

C. THE INFLUENCE OF OUTSIDE PARTIES ON CHILDREN’S

FINANCIAL CHOICES ..................................................................... 383

D. DEBT, CREDIT, AND FINANCIAL COMMITMENTS: LEARNING

FINANCIAL PRINCIPLES ................................................................ 385

E. THE PARENTS’ PERSPECTIVE ........................................................ 388

IV. REGULATION TIME: WHO’S THE BOSS? ............................................... 389

CONCLUSION ................................................................................................... 397

352 HASTINGS LAW JOURNAL [Vol. 74:349

INTRODUCTION

For the majority of Americans, money is a primary source of anxiety. Almost

90% of all Americans believe that nothing could make them happier than knowing

that their finances are in order, and more than three-quarters of millennials and

Generation X frequently experience emotional stress over money.

In looking for

ways to help Americans address this source of anxiety, some believe that increasing

children’s financial orientation could help lower their money-related anxiety levels

as adults,

and in general assist with addressing societal shortcomings. While not

everyone agrees with this approach,

identifying this market as a business

opportunity—motivated by research that shows that by age six children are already

veteran consumers of digital apps and games

—financial technology (fintech) and

decentralized finance (DeFi) companies, and even traditional financial institutions,

. See JUDY T. LIN, CHRISTOPHER BUMCROT, TIPPY ULICNY, GARY MOTTOLA, GERRI WALSH, ROBERT

GANEM, CHRISTINE KIEFFER & ANNAMARIA LUSARDI, THE STATE OF U.S. FINANCIAL CAPABILITY: THE 2018

NATIONAL FINANCIAL CAPABILITY STUDY 1, 2 (2019); Press Release, Am. Psych. Ass’n, American

Psychological Association Survey Shows Money Stress Weighing on Americans’ Health Nationwide (2015),

https://www.apa.org/news/press/releases/2015/02/money-stress?utm_content=buffer187d9&utm_medium=

social&utm_source=facebook.com&utm_campaign=buffer.

. Among those supporting this notion are lawmakers, industry and private sector participants, literacy

advocates, and even scholars. See, e.g., Youth Financial Education Act, S. 925, 109th Cong. § 4401(b)(3) (2005);

Improving Financial Literacy in the United States: Hearing Before the S. Comm. on Banking, Housing, and

Urban Affairs, 109th Cong. (2006) (statement of Ben S. Bernanke, Chairman of the Board of Governors, Federal

Reserve System) (citing Gregory Elliehausen, E. Christopher Lundquist & Michael E. Staten, The Impact of

Credit Counseling on Subsequent Borrower Credit Usage and Payment Behavior (Jan. 2003) (unpublished

manuscript), https://www.federalreserve.gov/communityaffairs/national/CA_Conf_SusCommDev/pdf/staten

michael.pdf (arguing that it is empirically shown that financial education increases credit standing).

. There are, however, commentators who disagree with this approach. See, e.g., Lauren E. Willis, Against

Financial-Literacy Education, 94 IOWA L. REV. 197, 197 (2008) (“[T]he predicate belief in the effectiveness of

financial-literacy education lacks empirical support. Moreover, the belief is implausible, given the velocity of

change in the financial marketplace, the gulf between current consumer skills and those needed to understand

today’s complex nonstandardized financial products, the persistence of biases in financial decisionmaking, and

the disparity between educators and financial-services firms in resources with which to reach consumers.”);

Gregory Elliehausen, E. Christopher Lundquist & Michael E. Staten, The Impact of Credit Counseling on

Subsequent Borrower Behavior, 41 J. CONSUMER AFFS. 1, 2 (2007) (admitting that their earlier work’s data does

not show a statistically significant impact of financial literacy on credit outcomes); Howell E. Jackson & Stacy

A. Anderson, Can States Tax National Banks To Educate Consumers About Predatory Lending Practices?,

30 HARV. J.L. & PUB. POL’Y 831, 844 n.51 (2007); Douglas A. Hershey, David A. Walsh, Ruby Brougham,

Stephen Carter & Alicia Farrell, Challenges of Training Pre-Retirees To Make Sound Financial Planning

Decisions, 24 EDUC. GERONTOLOGY 447, 467 (1998) (indicating that consumers who participated in retirement-

related financial sessions believed that their financial orientation had improved, yet their scores on financial

examinations had not); James J. Choi, David Laibson, Brigitte C. Madrian & Andrew Metrick, Saving for

Retirement on the Path of Least Resistance, in BEHAVIORAL PUBLIC FINANCE 304, 335–37 (Edward J.

McCaffery & Joel Slemrod eds., 2006) (showing how employees who reported at the end of a retirement-

investing class that they would up their savings typically ended up not doing so); Jean Braucher, An Empirical

Study of Debtor Education in Bankruptcy: Impact on Chapter 13 Completion Not Shown, 9 AM. BANKR. INST.

L. REV. 557, 574–77 (2001) (showing that the positive impact of bankruptcy-debtor education vanished upon

controlling for easier repayment programs and different types of assistance offered to debtors who attended the

educational sessions).

. See, e.g., Press Release, UNICEF, Every Fourth Child in Preschool Age Owns a Digital Device (June

15, 2018), https://www.unicef.org/serbia/en/press-releases/every-fourth-child-preschool-age-owns-digital-

device.

February 2023] FINANCIAL INCLUSION GONE WRONG 353

have recently started offering their services to children.

These services include a

broad array of financial products and services, from enabling children to earn

money for doing their chores, to trading securities and fractions of 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 positive. Second, children will

eventually mature into adult customers who presumably will continue using the

services and products they like and are familiar with. Moreover, if companies

providing such services get users hooked on their services and products, this

could prove beneficial for their businesses in the long term. While regulators

that deal with investor protection are now focused on financial apps’ digital

. See, e.g., Sarah Hansen, Investment Giant Fidelity Will Let Your Teen Trade Stocks—for Free, FORBES

(May 18, 2021, 9:20 AM), https://www.forbes.com/sites/sarahhansen/2021/05/18/investment-giant-fidelity-

will-let-your-teen-trade-stocks-for-free/?sh=719b18884fe4; Kids Savings Account, CAP. ONE,

https://www.capitalone.com/bank/savings-accounts/kids-savings-account/#id_accountdetails (last visited Jan.

28, 2023); Eliza Haverstock, With Debit Cards and Investing for Kids, Fintech Startup Greenlight Doubles

Valuation to $2.3 Billion, FORBES, https://www.forbes.com/sites/elizahaverstock/2021/04/27/with-debit-cards-

and-investing-for-kids-fintech-startup-greenlight-doubles-valuation-to-23-billion/?sh=32c386d93aad (Apr. 27,

2021, 11:15 AM); Simon Chandler, Blockchain Games in 2022: Play-To-Earn, Gamification, Interoperability

and Major Publishers, CRYPTONEWS (Feb. 13, 2022, 4:00 AM), https://cryptonews.com/exclusives/blockchain-

games-2022-play-earn-gamification-interoperability-major-publishers.htm; What To Know About Savings

Accounts for Kids, BANK OF AM.: BETTER MONEY HABITS, https://bettermoneyhabits.bankofamerica.com

/en/personal-banking/best-savings-accounts-for-kids (last visited Jan. 28, 2023).

. See, e.g., Robert Farrington, Play-To-Earn Gaming Is Driving NFT and Crypto Growth, FORBES (Dec.

13, 2021, 10:45 AM), https://www.forbes.com/sites/robertfarrington/2021/12/13/play-to-earn-gaming-is-

driving-nft-and-crypto-growth/?sh=600e1e7fc2dc; Ojash Yadav, What Is GameFi and Can You Really Earn

Money Playing Video Games?, MAKE TECH EASIER (Feb. 9, 2022), https://www.maketecheasier.com/what-is-

gamefi/; Clive Thompson, The Untold Story of the NFT Boom, N.Y. TIMES (May 12, 2021), https://www.nytimes

.com/2021/05/12/magazine/nft-art-crypto.html?searchResultPosition=1.

354 HASTINGS LAW JOURNAL [Vol. 74:349

engagement practices

—such as Robinhood’s gamification features

—

examining the impact of these features on customers in general,

with a specific

focus on children using such financial services as a subgroup, is critical.

“Children’s law” is not a single body of law with a coherent set of

principles.

“[H]owever, one common theme . . . extends across the many

bodies of law that apply to children”: children’s development and the differences

associated with it justify distinct treatment of children in various legal contexts.

Consumer and investor protection, along with securities law, should be among

the legal contexts that treat children differently. Indeed, children are protected

. Between 2021 and 2022, gamification became an object of much legislative and regulatory interest,

and the SEC has made gamification a priority. See Benjamin Bain & Robert Schmidt, Gensler Targets Broker

‘Gamification’ After Trading Tumult, BLOOMBERG, https://www.bloomberg.com/news/articles/2021-03-

02/gensler-says-scrutinizing-trading-apps-would-be-focus-at-sec (Mar. 2, 2021, 11:17 AM). In May 2021,

testifying before Congress, SEC Chairman Gary Gensler specifically objected to brokerage apps that use

“psychological prompts to get people to trade more.” U.S. House Comm. on Fin’l Servs., Virtual Hearing -

Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide, Part III,

YOUTUBE (May 6, 2021, 12:00 PM), https://www.youtube.com/watch?v=vX2X8xxHEns. Similarly, the

Democratic majority of the Commission have showed approval and support for regulating gamification. See

Allison Herren Lee, Comm’r, SEC, Leveraging Regulatory Cooperation To Protect America’s Investors:

Remarks at the 2021 Section 19(d) Conference (May 21, 2021), https://www.sec.gov/news/speech/lee-2021-

section-19d-conference; Chris Ekimoff & Kurt Wolfe, Enforcing the Regulations: A Conversation with

Commissioner Crenshaw, PRACTISING L. INST.: INSECURITIES PODCAST, at 18:45 (June 17, 2021),

https://insecurities.podbean.com/e/enforcing-the-regulations-–-a-conversation-with-commissioner-crenshaw/.

The SEC’s Republican commissioners, however, have been advocating for a different approach regarding the

regulation of gamification. See, e.g., Hester M. Peirce, SEC, Atomic Trading, Speech at the George Washington

University Law School Regulating the Digital Economy Conference (Feb. 22, 2021), https://www.sec.gov

/news/speech/peirce-atomic-trading-2021-02-22 (advocating for the SEC to gamify its communications with

investors); Dean Seal, SEC’s Roisman Wary of Playing into ‘Gamification’ Fears, LAW360 (Nov. 16, 2021, 8:21

PM), https://www.law360.com/articles/1441062/sec-s-roisman-wary-of-playing-into-gamification-fears

(advancing an approach that would help avoid getting the SEC “mired in litigation”).

. See, e.g., Maggie Fitzgerald, Robinhood Gets Rid of Confetti Feature amid Scrutiny over Gamification

of Investing, CNBC (Mar. 31, 2021, 9:05 AM), https://www.cnbc.com/2021/03/31/robinhood-gets-rid-of-

confetti-feature-amid-scrutiny-over-gamification.html; Annie Massa & Tracy Alloway, Robinhood’s Role in the

‘Gamification’ of Investing, BLOOMBERG, https://www.bloomberg.com/news/articles/2020-12-19/robinhood-s-

role-in-the-gamification-of-investing-quicktake (July 15, 2021, 9:00 PM); Nathaniel Popper, Robinhood Has

Lured Young Traders, Sometimes with Devastating Results, N.Y. TIMES (July 8, 2020), https://www.nytimes

.com/2020/07/08/technology/robinhood-risky-trading.html; Hannah Levintova, Robinhood Promises Free

Trades. Did Alex Kearns Pay with His Life?, MOTHER JONES (Apr. 29, 2021), https://www.motherjones.com

/politics/2021/04/robinhood-gamestop-free-trades-alex-kearns/.

. More and more financial service providers are looking to gamify their services and offerings and to

include game-like features that will draw and capture the attention of customers. For example, Long Game, a

platform that turns personal savings into a game, received much attention from traditional financial institutions.

See Mary Ann Azevedo, Banking Giant Truist Acquires Fintech Startup Long Game in Effort To Reach Younger

Demographic, TECHCRUNCH (May 3, 2022, 3:01 AM), https://techcrunch.com/2022/05/03/banking-giant-truist-

acquires-fintech-startup-long-game-in-effort-to-reach-younger-demographic/. In the spring of 2022, Long Game

was acquired by Truist Financial Corporation, the sixth largest bank in the United States and the product of a

2019 merger between BB&T and SunTrust banks. Id.

. Emily Buss, What the Law Should (and Should Not) Learn from Child Development Research,

38 HOFSTRA L. REV. 13, 18–19 (2009) (dividing the law’s distinct treatment of children into a few largely

defining categories: constitutional law, torts, and contracts; criminal and civil law; substantive law and

procedure).

. Emily Buss, The Law’s Role in Raising Children, 46 OHIO N.U. L. REV. 267, 267 (2020).

February 2023] FINANCIAL INCLUSION GONE WRONG 355

as consumers, for example, by unique legislation such as the Children’s Online

Privacy Protection Act (COPPA),

which was largely designed to outlaw

“unfair or deceptive acts or practices in connection with personal information

from and about children on the internet.”

Such unfair or deceptive acts or

practices have been recognized in children-targeted devices, toys, wearables,

and Internet of Things-based devices.

But, more relevantly and disturbingly

for this Article’s purposes, studies have found that more “than two-thirds of the

1,000 most popular iPhone apps likely to be used by children collect and send

their personal information out to the advertising industry[;] . . . [o]n Android, 79

percent of popular kids’ apps do the same.”

Indeed, there is a reason why

children cannot vote, enlist in the military, obtain a driver’s license, purchase

tobacco, drink alcohol, and do other types of activities that adults can

—it takes

time for children’s judgment and capacity to understand consequences to

develop. Furthermore, children’s use of digital technology deserves special

attention, because not only does research find, for example, that many children

cannot distinguish ads from content, but also that data collected about them as

users can be misused in uniquely harmful ways. Therefore, society has decided

to protect children and prevent individuals, businesses, and other entities from

exploiting children’s behavioral data or manipulating children online. Fintech

and DeFi apps and games targeting children should not be treated any

differently. Yet this business trend will continue to grow as offering financial

services to children becomes socially acceptable, especially given society’s

newly adopted paradigms for describing, understanding, and shaping children’s

. See Children’s Online Privacy Protection Act (COPPA), Pub. L. No. 105-277, 112 Stat. 2681-728 to -

735 (1998) (codified as amended at 15 U.S.C. §§ 6501–6506). COPPA is supplemented by a rule created,

updated, and enforced by the Federal Trade Commission (FTC). See Children’s Online Privacy Protection Rule,

64 Fed. Reg. 59888, 59888 (Nov. 3, 1999) (codified at 16 C.F.R. pt. 312 (2018)). The COPPA Rule has been

effective since April 21, 2000. Children’s Online Privacy Protection Rule, 78 Fed. Reg. 3972, 3972 (Jan. 17,

2013).

. For a discussion of COPPA, see Eldar Haber, The Internet of Children: Protecting Children’s Privacy

in a Hyper-Connected World, 2020 U. ILL. L. REV. 1209, 1224 (“The protection of children’s privacy online was

first formally acknowledged with the enactment of COPPA in 1998.”); Gaia Bernstein, When New Technologies

Are Still New: Windows of Opportunity for Privacy Protection, 51 VILL. L. REV. 921, 948–49 (2006); Andrea

M. Matwyshyn, Material Vulnerabilities: Data Privacy, Corporate Information Security, and Securities

Regulation, 3 BERKELEY BUS. L.J. 129, 155–56 (2005). Commentators have argued that COPPA was a reaction

to the failure of self-regulation, especially following the Kids.com advisory letter in which the FTC specified

standards for privacy policies on websites targeting children. See How COPPA Came About,

INFORMATIONWEEK (Jan. 14, 2004), http://www.informationweek.com/story/showArticle.jhtml?articleID=173

00888. Prior to COPPA, the 1974 Family Educational Rights and Privacy Act regulated children’s informational

privacy– and family privacy–related matters. See Family Educational Rights and Privacy Act, Pub. L. No. 93-

380, 88 Stat. 571, 571–74 (1974) (codified at 20 U.S.C. § 1232g).

. See, e.g., Haber, supra note 13, at 1209; Eldar Haber, Toying with Privacy: Regulating the Internet of

Toys, 80 OHIO ST. L.J. 399, 401–02 (2019). For a taxonomy of privacy, see Daniel J. Solove, A Taxonomy of

Privacy, 154 U. PA. L. REV. 477, 478 (2006).

. Geoffrey A. Fowler, Your Kids’ Apps Are Spying on Them, WASH. POST (June 9, 2022, 8:00 AM),

https://www.washingtonpost.com/technology/2022/06/09/apps-kids-privacy/.

. Cole F. Watson, Protecting Children in the Frontier of Surveillance Capitalism, 27 RICH. J.L. &

TECH. 1, 36 (2021).

356 HASTINGS LAW JOURNAL [Vol. 74:349

rights, domestic relationships, custodial status, and even digital purchasing

power.

This is not to say that fintech and DeFi apps and games do not offer any

educational value for children—such a statement would be wrong. These apps

and especially games can help teach those using them about the value of money

and how to earn it, the importance of investing, and the risks associated with

trading.

But they can also have a developmentally and behaviorally disruptive

influence on children by functioning like “hard drugs” or “acting like

stimulants” for children; the dopamine released by the stimulation of digital apps

and games hits children and teens more virulently because their cerebral cortexes

are not sufficiently developed to enable them to feel satisfied with small doses

or to self-regulate.

This in turn causes anxiety and stress, subjecting children

to social influencers’ manipulations,

or simply inculcating the wrong values.

Moreover, these apps and games should be a source of concern to anyone

focused on consumer and investor protection and securities laws, including

regulatory agencies like the Securities and Exchange Commission (SEC) and

Financial Industry Regulatory Authority (FINRA), which have already

expressed concerns about gamification, financial apps’ digital engagement

practices, and their potential effects,

or the Federal Trade Commission (FTC),

which regulates deceptive practices and online gaming.

Drawing from legal and ethical reasoning, social studies’ insights, and

behavioral economics tools, this Article calls for the search for effective

financial literacy education for children to be replaced with a search for policies

conducive to good consumer financial outcomes. These policies should also

focus on broker-dealer regulation, a subfield of securities law; brokers are those

. See generally KEVIN WERBACH & DAN HUNTER, FOR THE WIN: THE POWER OF GAMIFICATION AND

GAME THINKING IN BUSINESS, EDUCATION, GOVERNMENT, AND SOCIAL IMPACT (2020) (discussing the many

educational advantages of gamification).

. See infra Part III.A.

. Social influence has always played a role in marketing, decision-making, and even financial behavior,

but the popularity of online social influence has reached a whole new level. From stock promotions on TikTok

videos to viral posts on Instagram like Kim Kardashian’s cryptocurrency plug, people have been following their

favorite influencers’ promotions, with children and emerging adults being especially susceptible to the influence

of outside parties. See infra Part III.B.

. See infra Part III.B (discussing the example of Kwedit, one of the first companies based on the “buy

now, pay later” (BNPL) business model, which enabled children to make and back out of digital purchases,

instilling the understanding that it is okay to purchase things one cannot afford and back out of financial

commitments).

. See Request for Information and Comments on Broker-Dealer and Investment Adviser Digital

Engagement Practices, Exchange Act Release No. 34-92766, 86 Fed. Reg. 49067, 49071 (Sept. 1, 2021)

(requesting information and comments on broker-dealer and investment-adviser digital engagement practices);

Game Stopped? Who Wins and Loses When Short Sellers, Social Media, and Retail Investors Collide, Part III:

Hearing Before the H. Comm. on Fin. Servs., 117th Cong. 2 (2021) (testimony of Gary Gensler, Chairman,

SEC); FINRA, 2021 REPORT ON FINRA’S EXAMINATION AND RISK MONITORING PROGRAM 2 (2021),

https://www.finra.org/sites/default/files/2021-02/2021-report-finras-examination-riskmonitoring-program.pdf

(highlighting that the use of interactive and “game-like features” by online broker-dealers to engage with

customers can result in increased risk for customers).

February 2023] FINANCIAL INCLUSION GONE WRONG 357

“engaged in the business of effecting transactions in securities for the account

of others,” or for their own accounts.

In calling for this shifted focus, this

Article explores the following issues, which should guide lawmakers in

regulating financial apps offered to children: (i) the addictiveness of digital

gaming; (ii) how gamifying finance makes it feel less serious; (iii) the

connection between gamification and gambling; (iv) the fact that children’s

financial choices are more susceptible to the influence of outside parties than are

adults’; (v) the consequences of financial apps failing to teach children the

importance of concepts such as debt, credit, and financial commitments; and

finally, (vi) the added, unrealistic burden on young parents who already struggle

with constantly supervising their children’s online activities to additionally

monitor their children’s online financial activities in our digital era.

This Article is structured as follows. Part I examines how important money

and finance is to most people, how it has become the most significant source of

anxiety for Americans, and the importance of financial literacy and education.

Part II explores the concepts of fintech, DeFi, and game financialization

(GameFi), and examines the development of the gamification trend in the

financial industry and how children have become a significant target audience

for financial platforms, apps, and games despite their limited legal capacity as

minors. Part III examines some reflections on policy implications regarding the

gamification of the financial industry as it relates to and affects children

developmentally, socially, and behaviourally. Part IV examines the regulatory

initiatives that address some of the relevant issues relating to children and the

financial products and services offered to them on digital platforms and apps.

This Article then explores which government agencies have authority over

regulating these issues and which ones could be up to this task, if at all. Finally,

it concludes by offering some policy recommendations and advocating for

greater scrutiny of the gamification of finance’s effect on children.

I. IT’S ALL ABOUT THE MONEY

A. MONEY AS A SOURCE OF ANXIETY

Financial worries can be extremely stressful. According to a 2018 FINRA

survey, more than half of the Americans surveyed agreed that thinking about

their finances made them anxious; 44% felt that discussing their finances was

stressful, with respondents ages eighteen to thirty-three reporting the highest

levels of stress (63%) and anxiety (55%).

Similarly, according to a study

conducted by the American Psychological Association, money has been found

to be especially angst-producing for parents and younger adults, with more than

. 15 U.S.C. § 78c(a)(4)(A). See, e.g., Peter H. Huang, Trust, Guilt, and Securities Regulation, 151 U.

PA. L. REV. 1059, 1067–68 (2003) (discussing the regulation of broker-dealers).

. See LIN ET AL., supra note 1.

358 HASTINGS LAW JOURNAL [Vol. 74:349

75% of the surveyed parents—millennials and Generation X

—frequently

experiencing emotional stress over their finances.

Likewise, a 2018 study

conducted by Northwestern Mutual found that 87% of Americans believe that

nothing could make them happier or more self-assured than knowing that their

finances are in order.

This anxiety is justified. Many Americans are not managing their financial

lives as well as one would hope. Around 12.8 million consumer bankruptcy

petitions were filed in federal courts between October 2005 and September

2017.

Then, in 2019, right before the COVID-19 pandemic erupted, the United

States experienced a large number of bankruptcy filings, with 774,940 new cases

opened in the federal court system.

Although there were fewer bankruptcy

cases filed in 2020 despite the COVID-19 pandemic disrupting normal life and

increasing unemployment rates, scholars have argued that this decrease is likely

the temporary effect of the combination of government stimulus, loan

forbearance, and liquidity constraints that helped depress bankruptcy-filing

rates.

Additionally, parents received a child tax credit from the government

that, according to studies, greatly helped reduce financial stress.

But that

benefit ended in December 2021, leaving millions wondering how to make ends

meet.

. Scholars refer to these two generations as the “age cohorts born after 1964.” See, e.g., Amy J.

Sepinwall, Conscience in Commerce: Conceptualizing Discrimination in Public Accommodations, 53 CONN. L.

REV. 1, 32 n.134 (2021).

. See Am. Psych. Ass’n, supra note 1.

. Planning & Progress Study 2018, NW. MUT., https://news.northwesternmutual.com/planning-and-

progress-2018 (last visited Jan. 28, 2023).

. Arthur Zuckerman, 80 Bankruptcy Statistics: 2020/2021 Data, Insolvency Factors & Recovery

Predictions, COMPARECAMP (May 26, 2020), https://comparecamp.com/bankruptcy-statistics/#TOC6.

. See U.S. BANKR. CTS., REPORT F-5A: U.S. BANKRUPTCY COURTS—BUSINESS AND NONBUSINESS

BANKRUPTCY CASES COMMENCED, BY COUNTY AND CHAPTER OF THE BANKRUPTCY CODE—DURING THE 12-

MONTH PERIOD ENDING DECEMBER 31, at 1 (2019), https://www.uscourts.gov/statistics/table/f-5a/bankruptcy-

filings/2019/12/31.

. See Jialan Wang, Jeyul Yang, Benjamin Iverson & Raymond Kluender, Bankruptcy and the COVID-

19 Crisis 21 tbl.1 (Harvard Bus. Sch., Working Paper No. 21-041, 2020), https://www.hbs.edu/ris

/Publication%20Files/21-041_a9e75f26-6e50-4eb7-84d8-89da3614a6f9.pdf (tracking bankruptcy filings in the

United States using real-time data on the universe of filings, and observing that the total number of bankruptcy

filings was down by 28% in 2020 relative to the same period in 2019, contrary to media reports and experts’

expectations). Supporting this explanation, law professor Pamela Foohey argued that in 2021, there were “many

forces . . . pushing people to not file bankruptcy,” but that this does not mean people will not do so later. See

Andrew Keshner, ‘2022 Could Be the Year of Financial Reckoning’: Bankruptcies Fell Dramatically in 2021,

but These Challenges Await, MARKETWATCH, https://www.marketwatch.com/story/2022-could-be-the-year-of-

financial-reckoning-bankruptcy-cases-fell-dramatically-in-2021-but-new-challenges-await-11641296556 (Jan.

8, 2022, 9:26 AM).

. The Child Tax Credit Is Buffering Families from Financial Hardship, RAPID SURVEY PROJECT 3–4

(Dec. 16, 2021), https://static1.squarespace.com/static/5e7cf2f62c45da32f3c6065e/t/61bb5206be15101c1c036

ede/1639666182531/CTC+buffering+families_dec2021.pdf.

. Ben Casselman, Child Tax Credit’s Extra Help Ends, Just as Covid Surges Anew, N.Y. TIMES,

https://www.nytimes.com/2022/01/02/business/economy/child-tax-credit.html (Jan. 3, 2022) (“[The] monthly

child benefit, part of the Biden administration’s response to the pandemic[, is ending]. [These] payments, which

started in July and amounted to hundreds of dollars a month for most families, have helped millions of American

February 2023] FINANCIAL INCLUSION GONE WRONG 359

Historically, bankruptcy filings have closely followed the business cycle in

the United States. But because many forces came into play during the COVID-

19 pandemic in an attempt to keep the economy afloat,

there could be a delay

in seeing how long it actually takes people to begin suffering financially from

challenging economic circumstances.

Such financial difficulties were

somewhat reflected in Chase’s December 2021 survey, which showed that 40%

of parents of children ages seventeen and younger cited the ability to afford their

family’s basic living expenses, including food and utilities, as their main

financial stressor.

These financial difficulties are predictable, given that the

total U.S. household debt climbed to more than $15 trillion from September to

December 2021, according to a report published by the Federal Reserve Bank of

New York.

But bankruptcy is not a solution that should be adopted lightheartedly. It

should be the last resort for consumers in financial distress who need the chance

to liquidate their debts and gain a fresh start, as it comes at a cost, both in what

consumers pay to file bankruptcy and in damage to consumers’ credit scores,

families pay for food, rent and child care; kept millions of children out of poverty; and injected billions of dollars

into the U.S. economy . . . .”).

. See Keshner, supra note 29 (stating that according to a federal court system report from Supreme Court

Chief Justice John Roberts, “[i]ncreased government benefits” throughout the year—such as third round $1,400

stimulus checks, supplemental jobless benefits, and monthly child tax credit payments—were one reason for the

“drop” in bankruptcy filings, along with “eviction moratoriums” and “state lockdown orders that decreased

personal expenditures”). With these special circumstances nearing their end, however, it is doubtful that the drop

in case filings will continue into 2022, or after.

. See generally Pamela Foohey, Robert M. Lawless, Katherine Porter & Deborah Thorne, Life in the

Sweatbox, 94 NOTRE DAME L. REV. 219 (2018) (arguing that it can take people around two years of financial

struggle ending with a crisis like an eviction notice before they file for bankruptcy). Foohey stated that, in the

context of 2020 to 2021, it is “unclear when the clock on that struggle might be occurring.” Keshner, supra note

29.

. Gabrielle Olya, 40% of Parents Are Stressed About Covering Basic Living Expenses — Why Are So

Many Struggling?, GOBANKINGRATES (Jan. 6, 2022), https://www.gobankingrates.com/saving-money/family

/40-percent-parents-are-stressed-about-covering-basic-living-expenses/.

. Household Debt and Credit Report (Q3 2021), FED. RSRV. BANK OF N.Y.: CTR. FOR MICROECON.

DATA, https://www.newyorkfed.org/microeconomics/hhdc [https://web.archive.org/web/20211206183928

/https://www.newyorkfed.org/microeconomics/hhdc] (explaining that in the third quarter of 2021, the total

household debt increased by $286 billion (1.9%) to $15.24 trillion, mortgage balances (the largest component

of household debt) rose by $230 billion, auto loans increased by $28 billion, student loan balances grew by $14

billion, credit card balances increased by $17 billion, and non-housing balances grew by $61 billion, with gains

across all debt types).

. Ben Luthi, How Does Filing Bankruptcy Affect Your Credit?, EXPERIAN (July 26, 2020),

https://www.experian.com/blogs/ask-experian/how-does-filing-bankruptcy-affect-your-credit/ (“Your payment

history is the most important factor in determining your credit score, and filing bankruptcy means that you won’t

be paying covered debts in full as you initially agreed. As a result, filing bankruptcy can have a severely negative

impact on your credit score. A Chapter 7 bankruptcy will remain on your credit reports and affect your credit

scores for 10 years from the filing date; a Chapter 13 bankruptcy will affect your credit reports and scores for

seven years. Regardless of which type of bankruptcy you choose, lenders will be able to see it on your credit

reports in the public records section and it’s likely to be a factor in their decision-making. Once you’ve completed

the legal process, it will show that both the bankruptcy and the debts included in it have been discharged. If you

apply for credit, lenders may not approve your application unless the bankruptcy has been discharged. Even

then, you may have a hard time getting approved for certain types of loans. If you do get approved, you may

face steep interest rates and other unfavorable terms.”).

360 HASTINGS LAW JOURNAL [Vol. 74:349

which can result in further stress and difficulties. Yet bankruptcy may be on

many people’s minds, as recent studies have found that the most common

contributing factor to bankruptcy is a loss of income.

Further data collected

since March 2020 showing a range of ways in which people’s lives have been

affected by the COVID-19 pandemic demonstrates that more than half of U.S.

households experienced a loss in employment income—an extremely stressful

situation.

Likewise, studies show that since March 2020, approximately 35%

of adults surveyed in U.S. households expect someone in their household to lose

employment income in the next four weeks.

Moreover, although the omicron

variant of the coronavirus has not disrupted the U.S. economy as the virus did in

the spring of 2020, “it has [still] wreaked havoc on millions of Americans’

ability to work and pay their bills.”

Specifically, according to the U.S. Census

Bureau Household Pulse Survey, in January 2022, about nine million Americans

were not working due to sickness or were caring for someone close to them who

was sick.

Likewise, more than 31% of adults asked about their financial

conditions in January 2022 “said they were in households where it [was]

somewhat or very difficult to pay for usual expenses in the last seven days.”

Even worse, according to other studies, two-thirds of adults think that “money

[i]s a major source of stress in their lives, and [that] the main cause [i]s a lack of

fundamental financial literacy.”

B. CHILDREN AND FINANCIAL EDUCATION AND LITERACY

Whether rightfully or not, American financial regulation addressing

consumer protection issues has traditionally focused on the core policies of

disclosure and free choice.

However, as financial services like credit,

. Lyle Daly, Personal Bankruptcy Statistics for 2020, THE ASCENT (Mar. 24, 2020), https://www.fool

.com/the-ascent/research/personal-bankruptcy-statistics/. Additionally, bankruptcy is more common among

lower-income debtors, particularly those who earn $30,000 or less per year. Id.

. See Household Pulse Survey: Loss of Employment Income, U.S. CENSUS BUREAU,

https://www.census.gov/data-tools/demo/hhp/#/?periodSelector=12&measures=JOBLOSS (last visited Jan. 28,

2023) (“The Household Pulse Survey [was] designed to deploy quickly and efficiently, collecting data on a range

of ways in which people’s lives have been impacted by the pandemic.”).

. See Household Pulse Survey: Expected Loss in Employment Income, U.S. CENSUS BUREAU,

https://www.census.gov/data-tools/demo/hhp/#/?periodSelector=12&measures=LFNEXT (last visited Jan. 28,

2023).

. Tami Luhby, Omicron May Be Mild, but It’s Still Adding to Many Americans’ Financial Stress, CNN

POL. (Feb. 1, 2022, 10:42 AM), https://www.cnn.com/2022/02/01/politics/omicron-us-financial-stress/index

.html.

. Id.

. Chris Carosa, This Is Stressing You Most (and What You Should Do About It), FORBES (Jan. 30, 2022,

11:03 AM), https://www.forbes.com/sites/chriscarosa/2022/01/30/this-is-stressing-you-most-and-what-you-

should-do-about-it/?sh=4282dcbd1b25.

. Michael D. Guttentag, Protection from What? Investor Protection and the JOBS Act, 13 U.C. DAVIS

BUS. L.J. 207, 242 (2013) (“Lauren Willis has reached a complementary conclusion about the need for more

fundamental changes to protect investors from their own unwise financial decision-making processes. Willis

shows that reliance on disclosure requirements as a means to protect investors from making unwise investment

decisions is misplaced.”).

February 2023] FINANCIAL INCLUSION GONE WRONG 361

insurance, and trading have become increasingly more complex, individuals’

ability to understand them has greatly decreased. Attempting to address this

growing problem, some lawmakers have advocated for financial literacy

education.

Reaching similar conclusions about the importance of financial

literacy and orientation, in recent decades global organizations have also started

advocating for financial education,

measuring how successful countries have

been in implementing such educational programs and then comparing the

results.

This push for financial education has been advanced under the hope

that financial literacy will help turn consumers into “responsible” and

“empowered” market players.

Indeed, according to a recent FINRA study,

the lack of financial literacy is linked not only to undesired financial choices,

but also to high levels of anxiety and, unsurprisingly, low financial security.

Among the undesired financial choices are misguided, unfounded, or

poorly calculated financial decisions, which often overlap with what those filing

for bankruptcy cite as the main reasons for needing to declare bankruptcy. For

example, about 45% of a 2020 study’s respondents cited “unaffordable mortgage

or foreclosure” and “spending/living beyond means” as reasons that they agreed

contributed to their bankruptcy.

Moreover, more older Americans are filing for

. See generally Student Empowerment and Financial Literacy Act, H.R. 8486, 116th Cong. (2020);

CHERYL R. COOPER, CONG. RSCH. SERV., R46941, FINANCIAL LITERACY AND FINANCIAL EDUCATION POLICY

ISSUES (2021), https://crsreports.congress.gov/product/pdf/R/R46941 (calling for financial literacy education).

. 4 ORG. FOR ECON. COOP. & DEV., PISA 2015 RESULTS: STUDENTS’ FINANCIAL LITERACY 133–34

(2017), https://www.oecd.org/pisa/pisa-2015-results-volume-iv-9789264270282-en.htm; 4 ORG. FOR ECON.

COOP. & DEV., PISA 2018 RESULTS: ARE STUDENTS SMART ABOUT MONEY? 138–40 (2020), https://www.oecd-

ilibrary.org/docserver/48ebd1ba-en.pdf?expires=1668654625&id=id&accname=guest&checksum=76B826453

DA0D8329983368E66BECAAF; Naoyuki Yoshino, Peter J. Morgan & Ganeshan Wignaraja, Financial

Education in Asia: Assessment and Recommendations 3 (Asian Dev. Bank Inst., Working Paper No. 534, 2015),

https://www.adb.org/sites/default/files/publication/161053/adbi-wp534.pdf.

. ORG. FOR ECON. COOP. & DEV., supra note 46, at 27, 54–56; Sean Coughlan, Pisa Tests: UK Rises in

International School Rankings, BBC NEWS (Dec. 3, 2019), https://www.bbc.com/news/education-50563833;

Abigail Johnson Hess, US Students Scored Behind Estonia and Poland on This Financial Literacy Exam—Try

2 Questions for Yourself, CNBC (May 14, 2020, 9:38 AM), https://www.cnbc.com/2020/05/14/us-students-

scored-behind-estonia-on-this-financial-literacy-exam.html.

. Cf. Willis, supra note 3, at 202 (arguing that the pursuit of financial literacy also entails costs that

almost undoubtedly trump any benefits; for example, for some people, financial education leads to a false sense

of confidence that is not based on improved ability, and that leads to worse decisions).

. ANDREW STOLTMANN & BENJAMIN P. EDWARDS, FINRA GOVERNANCE REVIEW: PUBLIC GOVERNORS

SHOULD PROTECT THE PUBLIC INTEREST 1 (2017), https://piaba.org/system/files/2017-11/PIABA%20Report-

%20FINRA%20Governance%20Report%20%28November%2015%2C%202017%29.pdf (“The Financial

Industry Regulatory Authority (FINRA) plays a vital role in regulating the securities industry.”). FINRA

describes itself as “an independent, not-for-profit organization authorized by Congress to protect America’s

investors by making sure the securities industry operates fairly and honestly.” Id.

. Timothy Pierce & Angelita Williams, Large Number of Americans Reported Financial Anxiety and

Stress Even Before the Pandemic, FINRA (Apr. 28, 2021), https://www.finra.org/media-center/news

releases/2021/large-number-americans-reported-financial-anxiety-and-stress-even; see also ANDREA HASLER,

ANNAMARIA LUSARDI & OLIVIA VALDES, FINANCIAL ANXIETY AND STRESS AMONG U.S. HOUSEHOLDS: NEW

EVIDENCE FROM THE NATIONAL FINANCIAL CAPABILITY STUDY AND FOCUS GROUPS (2021),

https://gflec.org/wp-content/uploads/2021/04/Anxiety-and-Stress-Report-GFLEC-FINRA-FINAL.pdf?x8550

7).

. Daly, supra note 37.

362 HASTINGS LAW JOURNAL [Vol. 74:349

bankruptcy today than they did twenty-five years ago.

Among the top reasons

for their personal bankruptcy filings include the inability to handle medical

costs, the need to support parents or adult children, using a 401k instead of a

pension as retirement income, and holding debt from credit cards and mortgages

later in life.

Teaching younger generations about money, investing, and fiscal planning

at an earlier age, therefore, can be an effective way to increase financial literacy.

However, despite the importance of such education, not enough well-planned,

carefully designed and, most importantly, successfully executed initiatives have

been made to increase overall financial literacy. For example, a national

initiative designed to increase financial literacy among twelve- to seventeen-

year-olds introduced in the late 1990s proved to be a failure a decade later, with

findings that reflected severe financial literacy deficits—only one-quarter of

participants knew about basic financial concepts like inflation.

Similarly, a

survey conducted in 2019 on behalf of the National Foundation for Credit

Counseling found that among 2,086 adult Americans, 65% of those surveyed

were saving at least some funds for retirement, but only 18% felt very confident

about what they were doing and how much they were saving.

Likewise, when asked about debt, most people indicated that they had debts

and preexisting financial commitments, but their lack of understanding about

retirement funds and savings, or their debts, did not stop most survey participants

(55%) from giving themselves a grade of A or B in financial literacy.

A 2020

survey confirms this in-debt way of living, finding that only 16% of American

adults have never had debt.

Thus, 84% do not know a different way of living

and consuming. But this reality could change with financial education and

higher-quality, supervised exposure to financing and consumption options. For

instance, research shows that children whose parents had more education, more

financial means, or who discussed their investment and saving methods,

portfolios, and knowledge scored better than those who did not have any such

financial exposure.

Additionally, studies have found correlations between different

sociodemographic groups, indicating that children of immigrants or historically

financially weaker populations score lower than average on financial literacy

. Zuckerman, supra note 27.

. Id.

. Annamaria Lusardi, Olivia S. Mitchell & Vilsa Curto, Financial Literacy Among the Young, 44 J.

CONSUMER AFFS. 358, 361, 374–76 (2010).

. THE HARRIS POLL, 2019 CONSUMER FINANCIAL LITERACY SURVEY 9, 12 (2019), https://cdn2.hubspot

.net/hubfs/5146491/NFCC_2019%20FLS_datasheet%20with%20key%20findings_032519.pdf?utm_referrer=

https%3A%2F%2Fdigital.nfcc.org%2F.

. Id. at 4.

. THE HARRIS POLL, 2020 CONSUMER FINANCIAL LITERACY SURVEY 5 (2020), https://digital.nfcc.org

/wp-content/themes/foundation/assets/files/NFCC_Discover_2020_FLS_Datasheet%20With%20Key%20

Findings_Clean.pdf.

. Lusardi et al., supra note 54, at 376–77.

February 2023] FINANCIAL INCLUSION GONE WRONG 363

tests.

Acknowledging the many problems and difficulties associated with the

lack of appropriate financial education for Americans, the Financial Literacy and

Education Commission, established under the Fair and Accurate Credit

Transactions Act of 2003, declared a “National Strategy” for financial literacy

in 2020, seeking to establish a new program.

However, it is clear that much

more will need to occur for children to develop a true financial orientation,

especially given that a 2020 study by the Council for Economic Education found

that only 17% of high schools surveyed required their students to study personal

finance.

Focusing on increasing financial literacy and teaching children about

money, Shark Tank billionaire and fan of the flourishing fintech industry

Mark

Cuban explored in the media and public appearances the idea of buying

Dogecoin—the volatile cryptocurrency

Elon Musk has been publicly

. NAT’L CTR. FOR EDUC. STAT., PISA 2018 U.S. RESULTS 63 (2020), https://nces.ed.gov/surveys

/pisa/pisa2018/pdf/PISA2018_compiled.pdf.

. U.S. FIN. LITERACY & EDUC. COMM’N, U.S. NATIONAL STRATEGY FOR FINANCIAL LITERACY 2020, at

7–11 (2020), https://home.treasury.gov/system/files/136/US-National-Strategy-Financial-Literacy-2020.pdf.

. COUNCIL FOR ECON. EDUC., 2020 SURVEY OF THE STATES: ECONOMIC AND PERSONAL FINANCE

EDUCATION IN OUR NATION’S SCHOOLS 7 (2020), https://www.councilforeconed.org/wp-content/uploads/2020

/02/2020-Survey-of-the-States.pdf.

. The fintech industry is characterized by the emergence of new technologies that facilitate connectivity

and innovative mobile financial transactions of various kinds. For more on fintech and its impact on the financial

industry see, for example, William Magnuson, Regulating Fintech, 71 VAND. L. REV. 1167, 1174 (2018) (“[T]he

new breed of companies . . . specialize in providing financial services primarily through technologically enabled

mobile and online platforms.”); Rory Van Loo, Making Innovation More Competitive: The Case of Fintech,

65 UCLA L. REV. 232, 239 (2018) (“Fintech is used here to refer to the relatively new category of companies

whose business models are based on digital products[, but] leaves out legacy banks . . . which may now offer

similar products but whose services originally lacked a digital component.”). See generally Nizan Geslevich

Packin & Yafit Lev-Aretz, Big Data and Social Netbanks: Are You Ready To Replace Your Bank?, 53 HOUS. L.

REV. 1211 (2016); Chris Brummer & Yesha Yadav, Fintech and the Innovation Trilemma, 107 GEO. L.J. 235

(2019); Howell E. Jackson, The Nature of the Fintech Firm, 61 J.L. & POL’Y 9 (2020). Commentators, in

addition to industry participants, have argued that fintech could play a great role in increasing access to financial

services for underserved, underbanked, and unbanked populations. See, e.g., Ravi Menon, Managing Dir. of the

Monet. Auth. of Sing., Remarks at the Singapore FinTech Festival 2020 (Dec. 8, 2020), https://www.bis.org

/review/r201210c.htm (“[W]hat FinTech can do for an inclusive society, using Singapore as an example. This is

the vision: every citizen and every enterprise digitally enabled and financially included.”); Nizan Geslevich

Packin, Let FinTech Help Jumpstart the Economy, FORBES (Apr. 8, 2020, 9:55 AM), https://www.forbes.com

/sites/nizangpackin/2020/04/08/let-fintech-help-jumpstart-the-economy/#693c2ff06c24; EXEC. OFF. OF THE

PRESIDENT, BIG DATA: A REPORT ON ALGORITHMIC SYSTEMS, OPPORTUNITY, AND CIVIL RIGHTS 11‒12 (2016),

https://obamawhitehouse.archives.gov/sites/default/files/microsites/ostp/2016_0504_data_discrimination.pdf;

MARIANNE CROWE, MARY KEPLER & CYNTHIA MERRITT, THE U.S. REGULATORY LANDSCAPE FOR MOBILE

PAYMENTS 8–9 (2012), https://fraser.stlouisfed.org/title/us-regulatory-landscape-mobile-payments-6541

(explaining the government’s policy goal of financial inclusion, and discussing how it can be aided by mobile

technologies).

. Gregor Stuart Hunter, Retail Wave Spurs Sevenfold Surge in Dogecoin into Crypto Top 10,

BLOOMBERG (Jan. 28, 2021, 10:10 PM), https://www.bloomberg.com/news/articles/2021-01-29/retail-wave-

spurs-sevenfold-surge-in-dogecoin-into-crypto-top-10; David Goldman, Dogecoin Tumbles After Elon Musk

Jokes About It on ‘SNL,’ CNN BUS., https://edition.cnn.com/2021/05/09/investing/dogecoin-elon-musk-

snl/index.html (May 10, 2021, 9:34 AM).

364 HASTINGS LAW JOURNAL [Vol. 74:349

backing

—for his son as an “educational” activity.

Similarly, Twitter

cofounder and Block CEO Jack Dorsey teamed up with entertainer Jay-Z to

launch The Bitcoin Academy at Marcy Houses, the public housing complex in

Brooklyn, New York.

As part of that initiative, “[t]he Bitcoin Academy’s

website declares itself to represent ‘the future of money,’ and attendees will be

given smartphones and MiFi devices, which they may keep as needed. There is

also a ‘Crypto Kids Camp’ for kids aged 5 to 17.”

These methods of increasing

financial literacy among children through cryptoasset

trading might be too

much for some—certainly given how unpredictable

and less regulated

the

crypto industry has proven to be—but teaching children about investing and

saving is an age-old concept discussed long before the digital era. Indeed, even

in the 1960’s film, Mary Poppins, the grumpy, ultraconservative Mr. Banks

teaches his children about wise investing by describing compound interest.

Following more traditional approaches to financial education, the Consumer

Financial Protection Bureau (CFPB)

created online content meant to help

. Kevin Leyes, Elon Musk Continues To Back Dogecoin over Its Competitors: Should You Take a

Chance on the Meme Crypto?, ENTREPRENEUR (May 28, 2021), https://www.entrepreneur.com/article/372662.

. Taylor Locke, Mark Cuban on Dogecoin: No Intrinsic Value but ‘I Bought a Few Dollars Worth for

My Son’—It’s ‘Educational for Him,’ CNBC (Feb. 8, 2021, 1:51 PM), https://www.cnbc.com/2021/02/08/mark-

cuban-cryptocurrency-dogecoin-doesnt-have-intrinsic-value.html.

. Amanda Silberling, Jay-Z and Jack Dorsey Launched a Bitcoin Academy in a Public Housing Complex,

TECHCRUNCH (June 9, 2022, 4:14 PM), https://techcrunch.com/2022/06/09/jay-z-jack-dorsey-bitcoin-academy-

marcy-public-housing/.

. Jordan Hoffman, Jay-Z’s Bitcoin Academy Is Far from a Hit, VANITY FAIR (June 18, 2022),

https://www.vanityfair.com/style/2022/06/jay-z-bitcoin-academy-is-far-from-a-hit.

. See, e.g., Ronald J. Mann, Reliable Perfection of Security Interests in Crypto-Currency, 21 SMU SCI.

& TECH. L. REV. 159, 160–63 (2018) (explaining that cryptoassets do not fit exactly into any currently existing

framework and should thus be considered “general intangibles” for the purposes of the UCC); Tara Mandjee,

Bitcoin, Its Legal Classification and Its Regulatory Framework, 15 J. BUS. & SEC. L. 1, 64–66 (2014) (detailing

the disagreements among regulators and courts regarding how to classify cryptoassets); Megan McDermott, The

Crypto Quandary: Is Bankruptcy Ready?, 115 NW. U. L. REV. 1921, 1924 (2021) (describing the “[d]ebates

surrounding the proper legal characterization of crypto assets like Bitcoin”); Susan Alkadri, Note, Defining and

Regulating Cryptocurrency: Fake Internet Money or Legitimate Medium of Exchange?, 17 DUKE L. & TECH.

REV. 71, 97 (2018) (stating that cryptocurrency should be treated as money or currency for regulatory purposes).

. Lin Lin & Dominika Nestarcova, Venture Capital in the Rise of Crypto Economy: Problems and

Prospects, 16 BERKELEY BUS. L.J. 533, 563–64 (2019) (“The value of crypto-assets is uncertain given the

volatile nature of the crypto market. Furthermore, the accounting profession does not agree as to how such assets

should be valued.”).

. See Gary Gensler, Chairman, SEC, Remarks Before the Aspen Security Form (Aug. 3, 2021),

https://www.sec.gov/news/public-statement/gensler-aspen-security-forum-2021-08-03); Asress Adimi Gikay,

Regulating Decentralized Cryptocurrencies Under Payment Services Law: Lessons from European Union Law,

9 J.L. TECH. & INTERNET 1, 2 (2018) (“The only constant is the fast evolution of cryptocurrencies and businesses

centered on them and the lack of robust legal framework regulating them in many areas.”); Sarah Jane Hughes

& Stephen T. Middlebrook, Advancing a Framework for Regulating Cryptocurrency Payments Intermediaries,

32 YALE J. ON REG. 495, 495 (2015) (“[T]he operation of wallets and exchanges requires a new commercial law

that lays out rights and liabilities of cryptocurrency users in a robust and transparent fashion.”).

. MARY POPPINS (Walt Disney Productions 1964).

. See Van Loo, supra note 62, at 237. Van Loo explains how the CPFB and its main goal came to life.

See id. (“[P]rior to the 2008 financial crisis, banking regulators carried a dual mission of protecting consumers

and ensuring financial stability. This pairing subordinated consumer protection to stability. To solve this problem

in the wake of the subprime mortgage crisis, Congress launched a new agency, the Consumer Financial

February 2023] FINANCIAL INCLUSION GONE WRONG 365

caregivers teach children about money.

Similarly, the Federal Deposit

Insurance Corporation created a “Money Smart” curriculum that includes

references, books, and links for financial informational purposes for children as

young as prekindergarten to the second grade.

Despite the available resources

and the clear need for caregivers to teach children about money, many do not do

so, with only 37% of Americans actually talking to their their children about

money.

II. PLAYING WITH MONEY?

A. FINTECH APPS FOR CHILDREN: A GROWING BUSINESS TREND

Several years ago, a number of fintech companies began to identify the

financial-education market opportunity and explore the potential of that business

niche. Among the first to offer financial services to children was Greenlight,

which was founded in 2014 and reached unicorn status—being valued at more

than $1 billion—within a few years.

Greenlight generates revenue largely by

selling monthly subscriptions to families who use its services.

It started with

launching a debit card for children in 2017, and later branched out by offering

various digital financial services to children as young as six years old.

Though

six years old may sound too young for children to be using financial apps on a

smart device, by age six children are already veteran consumers of smart device

content. In fact, studies have shown that 30% of American children start

spending time playing with digital devices while they are still in diapers.

Likewise, the average age of children owning

and using

digital devices

continues to drastically drop all over the world as their daily screen time

continues to grow. Indeed, prior to the COVID-19 pandemic, American children

ages eight to twelve spent, on average, between four and six hours per day using

Protection Bureau (CFPB). The CFPB took over most of stability regulators’ consumer protection powers but

has no stability mission.”).

. See, e.g., Build Your Child’s Money Skills While You Read, CFPB, https://www.consumerfinance

.gov/consumer-tools/money-as-you-grow/bookshelf/ (last visited Jan. 28, 2023).

. Money Smart: Grades Pre-K–2, FDIC, https://www.fdic.gov/resources/consumers/money-smart

/teach-money-smart/money-smart-for-young-people/grades-pre-k-2.html (Feb. 2, 2022).

. Press Release, Am. Psych. Ass’n, Stress in America: Paying with Our Health 8 (Feb. 4, 2015),

https://www.apa.org/news/press/releases/stress/2014/stress-report.pdf.

. See Haverstock, supra note 5. Covering the company’s success, mainstream media reports in late 2021

suggested that the company is considering an IPO. Mark Maurer, Children’s Finance App Greenlight Names

CFO as It Prepares for IPO, WALL ST. J. (Dec. 7, 2021, 6:45 AM), https://www.wsj.com/articles/childrens-

finance-app-greenlight-names-cfo-as-it-prepares-for-ipo-11638877500.

. Haverstock, supra note 5.

. Id.

. COMMON SENSE MEDIA, THE COMMON SENSE CENSUS: MEDIA USE BY KIDS AGE ZERO TO EIGHT 19

(2017).

. See UNICEF, supra note 4; COMMON SENSE MEDIA, supra note 79, at 23.

. Antony Funnell, What We’re Beginning To Understand About Preschool Kids and Their Digital

Devices, ABC NEWS, https://www.abc.net.au/news/2020-06-12/pre-school-kids-digital-devices-internet-tech-

safety/12338772 (June 11, 2020, 8:28 PM); COMMON SENSE MEDIA, supra note 79, at 3.

366 HASTINGS LAW JOURNAL [Vol. 74:349

their digital devices, while teens spent up to nine hours per day.

Since the

COVID-19 pandemic began, the average amount of time children and teens

spend on the internet has nearly doubled, with children spending “an average of

7.7 hours a day in front of a screen, up from pre-pandemic estimates.”

With

children becoming more and more comfortable using their smart devices,

spending time downloading apps, and playing different online games, offering

them fintech and DeFi apps and games is becoming more common.

The potential of the new children’s fintech and DeFi apps and games

market is valuable for two reasons. First, reaching more audiences and getting

more customers is typically a positive thing for businesses. Second, child and

teenage customers will eventually mature into traditional adult customers, who

will presumably continue using the services they are familiar with from

childhood. Not wanting to lag behind their fintech competitors, some traditional

financial institutions recently decided to offer financial services to minors. These

financial institutions include Fidelity Investments, which in 2021 shared its plan

to give thirteen- to seventeen-year-olds debit cards, savings accounts, and even

access to an investment service that would allow young teens to trade U.S. listed

stocks, mutual funds, and ETFs under parental supervision;

Capitol One,

which started offering children’s bank accounts;

and Bank of America, which

also started marketing bank accounts to children.

B. DEFI, GAMEFI, AND PLAY TO EARN

With the rise of DeFi and the growing popularity of decentralized

autonomous organizations (DAOs),

some business entities have started to

understand the innovative new business models and revenue opportunities that

lie in blockchain and digital assets, such as non-fungible tokens (NFTs).

. Screen Time and Children, AM. ACAD. OF CHILD & ADOLESCENT PSYCHIATRY, https://www.aacap.org

/AACAP/Families_and_Youth/Facts_for_Families/FFF-Guide/Children-And-Watching-TV-054.aspx (Feb.

2020).

. Megan Marples, Kids Nearly Doubled Screen Time During the Pandemic, but There Is Something You

Can Do About It, CNN HEALTH (Nov. 1, 2021, 4:50 PM), https://www.cnn.com/2021/11/01/health/children-

screen-time-increase-pandemic-study-wellness/index.html.

. See Hansen, supra note 5.

. See Kids Savings Account, supra note 5.

. See What To Know About Savings Accounts for Kids, supra note 5.

. “DAOs are distributed, peer-to-peer computer software that incorporate governance and

decisionmaking [procedures and] rules.” Carla L. Reyes, If Rockefeller Were a Coder, 87 GEO. WASH. L.

REV. 373, 377 n.22 (2019). “Essentially, DAOs are elaborate smart contracts or systems of smart contracts. At

a very general level, the smart contracts that comprise a DAO allow a certain set of DAO members to spend the

digital assets held by those smart contracts or to modify the DAO’s code.” Id. at 387. For a deeper explanation

on decentralized governance see, for example, Carla L. Reyes, Nizan Geslevich Packin & Benjamin P. Edwards,

Distributed Governance, 59 WM. & MARY L. REV. ONLINE 1, 5 (2017).

. NFTs are digital assets that represent real-world objects such as art, music, and videos. See Juliet M.

Moringiello & Christopher K. Odinet, The Property Law of Tokens, 74 FLA. L. REV. 607, 631 (2022) (“The

choices are art, music, videos, collectibles, sports, and utility.”). For a deeper explanation on NFTs and their

legal status see, for example, Moringiello & Odinet, supra, at 663; Brian L. Frye, After Copyright: Pwning NFTs

in a Clout Economy, 45 COLUM. J.L. & ARTS 341, 348 (2022); see also Mike Isaac & Kellen Browning, Crypto

February 2023] FINANCIAL INCLUSION GONE WRONG 367

Among these new business models and revenue opportunities is GameFi,

which refers to “video games with decentralized financial components that are

backed by blockchain technology,”

and has become very popular in the gaming

and blockchain industries.

GameFi allows players to own different virtual

elements of games, such as skins, characters, objects, and even areas of the

actual game.

Moreover, although some games reward players virtual coins in

the form of game points that can only hold value within the game, other games

reward players with real cryptocurrencies.

This latter category of games—a

“symptom of a long-brewing problem in Western economies[,] ‘the

financialization of everything’”

—operates based on a model that has been

nicknamed “play-to-earn” (P2E), or “earn-to-play” (E2P).

It is characterized

by blockchain-enabled games that focus on generating value for players by

shifting the paradigm and allowing players to better capture the utility and value

of assets they acquire through gameplay and in-game purchases.

For example,

when a player purchases a shield upgrade in a traditional game, their only benefit

is improved gameplay within that game. But in a blockchain-based gaming

ecosystem that utilizes cross-platform NFTs, that very same shield can be

tokenized into transferable assets that can prove useful in other, interconnected

games and can be exchanged for different digital assets or even money.

Enthusiasts Meet Their Match: Angry Gamers, N.Y. TIMES, https://www.nytimes.com/2022/01/15

/technology/cryptocurrency-nft-gamers.html?searchResultPosition=1 (Jan. 19, 2022) (“For more than a year,

crypto mania has been at a fever pitch. Cryptocurrencies such as Bitcoin and Ethereum have soared in value.

Crypto-based assets like NFTs have taken off. Jack Dorsey, a Twitter founder, recently renamed one of his

companies Block in honor of the blockchain, the distributed ledger system that powers digital currencies.”).

. Yadav, supra note 6 (“The term GameFi comes from joining two words: games and decentralized

finance (DeFi). It was first coined in a 2020 tweet by Andre Cronje, the CEO of Yearn Finance. . . . But the roots

actually go back to 2013. Some early initiatives in this field included bitcoin integrations in Minecraft servers

and other games like Bombermine that rewarded players with real Bitcoins.”).

. Id.

. See, e.g., Paul Tassi, Reddit Cofounder Says 90% of Games in 5 Years Will Be Blockchain ‘Play-To-

Earn’ Titles, FORBES (Jan. 17, 2022, 10:41 AM), https://www.forbes.com/sites/paultassi/2022/01/17/reddit-

cofounder-says-90-of-games-in-5-years-will-be-blockchain-play-to-earn-titles/?sh=415c803914b1 (describing

how Reddit’s cofounder believes that “in five years, 90% of gamers will be playing games on the blockchain

that allow them to ‘earn’ value by their loot/currency having some sort of token equivalent that has actual

value”).

. See Isaac & Browning, supra note 88 (describing how GSC Game World, the Ukrainian company

behind the S.T.A.L.K.E.R. computer game, which has been popular with children for many years now,

announced in December 2021 “that the new S.T.A.L.K.E.R. would incorporate the crypto-based assets known

as nonfungible tokens, or NFTs,” and that “players could buy and sell NFTs of items like clothing for their in-

game characters” in “a ‘transformative step’ toward the virtual world known as the metaverse”).

. See Yadav, supra note 6.

. Thompson, supra note 6.

. See Isaac & Browning, supra note 88 (“One such game was CryptoKitties, a 2017 hit where players

collected digital cats, some of which sold for more than $100,000. In the pandemic, blockchain-based games

like Axie Infinity, where players make money by earning and selling NFTs, also became popular.”).

. See Udonis, Play-To-Earn Games 101: How Do They Work?, MEDIUM (Jan. 25, 2022), https://medium

.com/udonis/play-to-earn-games-101-how-do-they-work-56b07ad2117c.

. Roger W. Dorsey, Kyleen Prewett & Gaurav Kumar, Taxation of NFTs, 136 J. TAX’N 3, 5 (2022) (“The

P2E movement has attracted millions of users across several blockchains. The P2E sector attracted 754,000 daily

Unique Active Wallets (UAW) on average during the third quarter of 2021 . . . .”).

368 HASTINGS LAW JOURNAL [Vol. 74:349

Models like P2E represent a new intersection between gaming and finance

that entirely undermines the way society views financial participation and wealth

creation. Beyond banking the unbanked, P2E is a fun, game-based system that

rewards time and skill rather than privilege, financial means, and even maturity

and legal age.

The P2E model enables business entities such as Yield Guild

Games (YGG) to invest across the blockchain “metaverse” by “farming” gaming

assets and land parcels. For example, in the digital game Axie Infinity, YGG

buys up Axies and then recruits potential players to play Axie Infinity using

these Axies, which are lent to players. By doing so, YGG takes care of the

upfront cost of the Axies, lowering the barrier of entry for players, and in return

makes players split their earnings with the company.

These financial

possibilities have made other game studios and companies express interest in

P2E as well, but not everyone—young gamers included—is happy with this

trend; some critics are even comparing P2E to a Ponzi scheme.

100

Nevertheless,

some experts are fairly certain that the industry is changing.

[R]egular gaming could go the way of the dinosaur due to the play-to-earn

gaming model. After all, there are opportunities for parents to create a wallet

and allow their children or teenagers to play these games in the future, which

would give them the opportunity to do things they couldn’t do after playing

an Xbox. For example, they could earn money to spend on real-world items,

save for college, or save for the future.

101

Echoing this sentiment, and the fear of missing out, in 2021 to 2022,

mainstream news outlets featured the P2E trend and how it has resulted in

children’s financial success.

102

Yet there are many ethical and legal concerns

around the P2E trend that merit much more careful coverage and attention,

including significant issues relating to child labor (how many hours a day and

starting at what age should children be permitted to play with the intention of

earning a significant income?), taxation (who should pay taxes on the fruits of

. Beryl Li, A Play-To-Earn Account Beats a Bank Account, COINDESK, https://www.coindesk.com

/markets/2021/07/29/a-play-to-earn-account-beats-a-bank-account/ (Sept. 14, 2021, 6:33 AM).

. Jillian Godsil, Blockchain Games Take on the Mainstream: Here’s How They Can Win,

COINTELEGRAPH (May 3, 2022), https://cointelegraph.com/magazine/2022/05/03/can-p2e-gaming-grind-away-

market-share-from-mainstream-games.

100

. See Isaac & Browning, supra note 88 (detailing the story of eighteen-year-old high schooler Christian

Lantz, who for years played S.T.A.L.K.E.R. and was upset by the “transformative step” toward cryptoassets,

joining thousands of other young fans on Twitter and Reddit who raged against this trend); see also Leeor

Shimron, Axie Infinity: Pernicious Pyramid Scheme or Gaming Breakthrough?, FORBES (Aug. 13, 2022, 8:12

AM), https://www.forbes.com/sites/leeorshimron/2022/08/13/axie-infinity-pernicious-pyramid-scheme-or-

gaming-breakthrough/?sh=21e0e12674b3 (“Since players are required to purchase the in-game assets to

participate[,] . . . analysts have begun to question whether the entire GameFi model is truly an innovative user

acquisition strategy or just a plain vanilla pyramid scheme fueled by speculative hype.”).

101

. Farrington, supra note 6; see also Joe Cortez, How To Pick the Right Play-To-Earn Game for You,

COINDESK, https://www.coindesk.com/learn/how-to-pick-the-right-play-to-earn-game-for-you/ (Mar. 10, 2022,

10:25 AM).

102

. See, e.g., Cortez, supra note 101; Bryant Francis, Opinion: Play-To-Earn Feels Like a Disaster Waiting

To Happen, GAME DEV. (Dec. 9, 2021), https://www.gamedeveloper.com/culture/opinion-play-to-earn-feels-

like-a-disaster-waiting-to-happen.

February 2023] FINANCIAL INCLUSION GONE WRONG 369

game labor, and to which governments?), contract law (who should be the parties

to a lawsuit dealing with a breach of contract that relates to a game’s terms of

service?), and financial regulation (should the SEC look into and regulate the

P2E business model?).

103

Additionally, educational aspects beyond financial

ones are involved in this trend, such as children’s exposure to adult content like

M-rated video games,

104

as well as potential privacy law issues far beyond the

scope of this Article that relate to children’s general engagement with digital and

online platforms.

105

C. PATERNALISM AND SOCIAL RESPONSIBILITY

The rise of fintech and DeFi apps and games for children that offer them

trading, earning, and investing services and other possibilities is a concerning

trend, and one that regulators and scholars have largely ignored thus far.

106

After

all, children are minors and legally defined as dependents, which means that they

must have legal guardians who handle all their matters, especially financial ones.

Children’s limited legal, economic, and social rights are based on the

presumably justifiable paternalistic approach that society adopted long ago,

107

although such an approach may be morally problematic.

108

The typical

paternalistic explanation offered is that children lack the same functional

103

. Francis, supra note 102. For a deeper analysis of the applicability of federal securities laws to

cryptocurrencies, cryptoassets, and crypto exchanges, see, for example, Yuliya Guseva, The SEC, Digital Assets,

and Game Theory, 46 J. CORP. L. 629, 641 (2021); Thomas Lee Hazen, Tulips, Oranges, Worms, and Coins –

Virtual, Digital, or Crypto Currency and the Securities Laws, 20 N.C. J.L. & TECH. 493, 499 (2019); Carol R.

Goforth, Cinderella’s Slipper: A Better Approach to Regulating Cryptoassets as Securities, 17 HASTINGS BUS.

L.J. 271, 271 (2021).

104

. See Francis, supra note 102; see also Sam Reynolds, GameFi Faces Regulatory Headwinds in Major

Asian Markets, COINDESK, https://www.coindesk.com/policy/2022/02/01/gamefi-faces-regulatory-headwinds-

in-major-asian-markets/ (Feb. 1, 2022, 9:20 AM) (detailing how Asian regulators, appreciating the importance

of some of these issues, have recently expressed concerns over the GameFi trend).

105

. See, e.g., Nizan Geslevich Packin, Protecting Our Children in Cyberspace: What Are We Missing?,

FORBES (Nov. 10, 2022, 10:12 PM), https://www.forbes.com/sites/nizangpackin/2022/11/10/protecting-our-

children-in-cyberspace-what-are-we-missing/?sh=7bbb2a572c42 (explaining why we need to devote more

attention to the protection of children in cyberspace).

106

. James Fallows Tierney, Investment Games, 72 DUKE L.J. 353, 359 (2022) (expressing concern over

how the “law does not have a readymade theory” for addressing issues with children as potential investors and

consumers and being exposed to digital engagement practices, and “underscor[ing] the urgent need for

scholarship situating these practices in theory and doctrine”).

107

. Paternalism usually involves competing claims between individual liberty and authoritative social

control. R. George Wright, Legal Paternalism and the Eclipse of Principle, 71 U. MIA. L. REV. 194, 227–28

(2016); William Joseph Wagner, The Contractual Reallocation of Procreative Resources and Parental Rights:

The Natural Endowment Critique, 41 CASE W. RSRV. L. REV. 1, 174–75 (1990) (“Although the idea of

paternalism is anathema to liberalism, some degree of paternalism is unavoidable in law, because some members

of society are less than autonomous. Paternalism, in fact, underlies all law dealing with the choices of infants

and children, and it accounts for the law’s restriction on the right of children below the age of capacity to

contract.”).

108

. Samantha Godwin, Children’s Capacities and Paternalism, 24 J. ETHICS 307, 307 (2020).

370 HASTINGS LAW JOURNAL [Vol. 74:349

abilities adults have,

109

limiting their ability to reason and make decisions.

110

This lack of capacity can lead to diminished legal power, often seen in the

medical context wherein children have less independent decision-making

authority, even though adults with the same level of capacity might have

independent decision-making power.

111

Similarly, federal capacity doctrine—

the rules determining whether and how children’s civil litigation proceeds—has

stayed fundamentally the same for more than a century, and continues to assume

that all children are incompetent to direct their own cases such that adults must

litigate on their behalf.

112

Children’s lack of legal capacity is also supported by well-documented

research on their mental and physical abilities. For example, in many places,

children are not allowed to cross the street by themselves before a certain age,

and, although this is freedom limiting, it makes sense in light of scientific studies

that show that children before age fourteen do not have the ability to properly

assess and understand the risks related to crossing a busy street.

113

Alternatively, another explanation is grounded in societal assumptions

about adult autonomy

114

and a differing cost-benefit analysis for adults and

children.

115

For example, there is a heightened concern for the non-welfare

interests of adults, such as bodily integrity, avoidance of humiliation, and so

on.

116

But there is a heightened concern for the welfare interests of children as

compared to those of adults, because when children are harmed in certain ways,

it is felt to be a greater tragedy than when adults suffer the same harms.

117

109

. Not everyone agrees with this approach. See, e.g., id. (“If paternalism is often justified when needed to

keep children safe from the negative consequences of their poor choices, then when adults make choices leading

to the same negative consequences, what makes paternalism less justified? . . . What is not explained, however,

is why paternalism would be justifiable for children, but not adults, when neither possess the relevant interest-

promoting capacities—exactly the cases when paternalism toward adults might be considered.”).

110

. Id. at 310.

111

. Id. at 313.

112

. See generally Lisa V. Martin, Modernizing Capacity Doctrine, 73 FLA. L. REV. 821 (2021).

113

. Why Children Struggle To Cross Busy Streets Safely, SCIENCEDAILY (Apr. 20, 2017),

https://www.sciencedaily.com/releases/2017/04/170420090208.htm (citing Elizabeth E. O’Neal, Yuanyuan

Jiang, Lucas J. Franzen, Pooya Rahimian, Junghum Paul Yon, Joseph K. Kearney & Jodie M. Plumert, Changes

in Perception—Action Turning over Long Time Scales: How Children and Adults Perceive and Act on Dynamic

Affordances When Crossing Roads, 44 J. EXPERIMENTAL PSYCH.: HUM. PERCEPT. & PERFORM. 18, 18 (2018));

Richard Lewis, Kids Struggle To Safely Cross Busy Streets, FUTURITY (Apr. 24, 2017), https://www.futurity

.org/crossing-the-street-children-1409612-2/.

114

. Godwin, supra note 108, at 318–19.

115

. Id. at 324.

116

. Id.

117

. Id. at 325 (“[The] practice of saving ‘women and children first’ in disasters, the tendency of the media

to report child deaths separately from adult deaths, the greater willingness to provide government assistance to

deprived children than equally deprived adults, and the way statistically minimal risks to children are often

regarded as more politically or morally dire than statistically greater risks to adults.”). A recent, classic example

of this is the reporting of the rare multisystem inflammatory syndrome (also known as Kawasaki disease) in

children during the COVID-19 pandemic, despite the fact that overall, for the most part, children experienced

very light symptoms of COVID-19 and have been rarely severely impacted by the virus. See, e.g., Lindsey

Tanner, Most Kids with Serious Inflammatory Illness Had Mild Covid, ASSOCIATED PRESS (Apr. 6, 2021),

https://apnews.com/article/us-news-coronavirus-pandemic-05c95129b7e9877f3e714b278d3deb68 (explaining

February 2023] FINANCIAL INCLUSION GONE WRONG 371

Similarly, people tend to judge the justifiability of the treatment of children

under a consequentialist approach, whereas they normally judge the justifiability

of the treatment of adults using deontological ethics, regardless of the

consequences these adults’ actions have on human welfare.

118

D. CHILDREN’S RIGHTS

“Children’s rights” is not a properly defined term,

119

and during the

twentieth century it “has come to mean generally the intersection of human and

legal rights as they apply to persons under 18 years of age.”

120

In earlier

centuries, children’s rights did not exist as a distinct concept, and prior to the

1800s, children hardly had any legal rights.

121

They were frequently viewed in

the eyes of the law as a special sort of property, “owned” by their families and

guardians.

122

This is not to say children were not loved; parents have always

cared for their children.

123

But historically, children were expected to work to

make themselves useful and add value to their families.

124

Then, during the

Industrial Revolution, children’s work shifted from working on their relatives’

or families’ farms to providing labor in factories,

125

with poor children

experiencing the worst conditions.

126

Additionally, parents were permitted to do

that there were 3,185 U.S. reported cases in the media of children who developed the syndrome, which included

thirty-six deaths, even though most of the 3.5 million U.S. children and teens who tested positive for COVID-

19 in that same one-year period did not develop the syndrome).

118

. Godwin, supra note 108, at 325 (“There are many instances where it is often thought that even if

someone makes a decision that is demonstrably bad for them, their right as an adult to decide creates a duty of

non-interference that trumps others’ altruistic desires to intervene for their benefit, even if that person is left

worse for it. It is far less common to think that a child’s right to decide on anything creates a corresponding duty

to respect that decision when it results in demonstrably bad consequences.” (internal citation omitted)).

119

. Warren Binford, Rights of Children, in MAX PLANCK ENCYCLOPEDIA OF COMPARATIVE

CONSTITUTIONAL LAW (2017), https://oxcon.ouplaw.com/view/10.1093/law-mpeccol/law-mpeccol-e81?prd=

MPECCOL.

120

. Id.

121

. Richard L. Cupp, Jr., Children, Chimps, and Rights: Arguments from “Marginal” Cases, 45 ARIZ. ST.

L.J. 1, 6 (2013).

122

. See, e.g., Stephen R. Arnott, Autonomy, Standing, and Children’s Rights, 33 WM. MITCHELL L.

REV. 807, 809 (2007) (“[C]hildren were originally regarded as a species of property.”); Stuart N. Hart, From

Property to Person Status: Historical Perspective on Children’s Rights, 46 AM. PSYCH. 53, 53 (1991) (“Children

have recently emerged from hundreds of years of property status to be considered as persons.”).

123

. There are many biblical stories about the loving relationship between parents and children. See, e.g.,

Genesis 25:24–28 (Isaac and Jacob); Genesis 37:1–3 (Jacob and Joseph); Exodus 2:1–3 (Moses).

124

. See, e.g., Arnott, supra note 122, at 809 (analyzing the treatment of children in historic Greece, where

“abandoning a child did not count as homicide,” “children could be sold into slavery[,] and parents were under

no legal obligation to raise children”).

125

. See 2 MARVIN PERRY, MYRNA CHASE, JAMES R. JACOB, MARGARET C. JACOB & THEODORE H. VON

LAUE, WESTERN CIVILIZATION: IDEAS, POLITICS, AND SOCIETY 513 (9th ed. 2009) (describing children as

economic assets during the Industrial Revolution).

126

. MICHAEL BOURDILLON, DEBORAH LEVISON, WILLIAM MYERS & BEN WHITE, RIGHTS AND WRONGS

OF CHILDREN’S WORK 43 (2010) (analyzing how during the Industrial Revolution, child employment was very

much related to class); Peter Kirby, History of Child Labor in Britain, in THE WORLD OF CHILD LABOR: AN

HISTORICAL AND REGIONAL SURVEY 546–48 (Hugh D. Hindman ed., 2009) (discussing the employment of poor,

orphaned, apprentice children who “lived in the worst conditions, experienced the longest hours of work, and

were placed in the greatest risk of accidents”).

372 HASTINGS LAW JOURNAL [Vol. 74:349

as they saw fit with their children.

127

Religious institutions expected their

members to treat the father as the head of the family and considered him to be

the ultimate authority responsible for the education of the family’s children.

128

But as decades and even centuries passed, this approach toward children began

to evolve, and reforms to protect children that were mainly meant to address the

abuses associated with the Industrial Revolution were implemented,

129

despite

the economic disincentives for restricting child labor.

130

During the twentieth century, the concept of children’s rights came to mean

“the intersection of human and legal rights as they apply to persons under 18

years of age.”

131

In the United States, a crucial period in which “children’s

movements” were developed occurred in the late 1800s and the early years of

the 1900s

132

—a few decades often referred to by scholars as “the Progressive

Era.”

133

During those decades, the American cultural perception of children’s

well-being went from being a purely domestic matter to an issue for which

regulators became responsible and had to carefully address.

134

The progressives

pushing for the change lobbied for society to acknowledge its duties toward

children and pushed for legal reforms to protect them.

135

These progressives

wanted to create a better society by designing an improved environment for

children. But the Progressive Era children-related reforms were not based on and

did not use the terminology of rights. Instead, the progressives built their efforts

on ethical frameworks, especially those relating to society’s responsibility

toward children, and on the practical reasoning that protected, educated, and

nurtured children would better contribute to society’s future and success.

136

Then, several decades later in the 1960s, “children’s movements” became even

more powerful, and the children’s rights era, which we are still experiencing,

127

. See Jerry L. Anderson, Protection for the Powerless: Political Economy History Lessons for the Animal

Welfare Movement, 4 STAN. J. ANIMAL L. & POL’Y 1, 20 (2011).

128

. See ROGER COX, SHAPING CHILDHOOD: THEMES OF UNCERTAINTY IN THE HISTORY OF ADULT – CHILD

RELATIONSHIPS 41 (1996) (portraying the father as someone with the “ultimate responsibility” for his family);

STEVEN MINTZ & SUSAN KELLOGG, DOMESTIC REVOLUTIONS: A SOCIAL HISTORY OF AMERICAN FAMILY LIFE

1 (1988) (analyzing perceptions concerning a father’s authority).

129

. Anderson, supra note 127, at 58.

130

. Cupp, supra note 121, at 9.

131

. Binford, supra note 119, at 1.

132

. MARTIN GUGGENHEIM, WHAT’S WRONG WITH CHILDREN’S RIGHTS 1 (2005).

133

. Id.; see also Cupp, supra note 121, at 9; MICHAEL D. GRIMES, PATCHING UP THE CRACKS: A CASE

STUDY OF JUVENILE COURT REFORM 6 (2005) (“The third period in the history of the evolution of children’s

rights was the Progressive Era, a period that literally ‘straddled’ the end of the nineteenth century and the

beginning of the twentieth (1890–1920).”).

134

. See GUGGENHEIM, supra note 132, at 1–2.

135

. Id.; see also Martha Minow, What Ever Happened to Children’s Rights?, 80 MINN. L. REV. 267, 280

(1995) (detailing how limitations on child labor and compulsory education were the result of the Progressive

Era’s reforms).

136

. See, e.g., C.R. Margolin, Salvation Versus Liberation: The Movement for Children’s Rights in a

Historical Context, 25 SOC. PROBS. 441, 443 (1978) (“The Progressive Era brought dramatic increases in the

educational and welfare systems, and decreases in child labor.”).

February 2023] FINANCIAL INCLUSION GONE WRONG 373

officially began.

137

As part of this era’s global revolution, dozens of countries

started recognizing children’s rights to things like education, identity, freedom

from discrimination, family relations, protection from abuse and exploitation,

and much more.

138

Taking it a step further, some countries even went as far as

recognizing children’s political and socioeconomic rights.

139

Finally, the United

Nations Convention on the Rights of the Child, adopted in 1989, reinforced the

importance of protecting children’s interests, stating that “[i]n all actions

concerning children, whether undertaken by public or private social welfare

institutions, courts of law, administrative authorities or legislative bodies, the

best interests of the child shall be a primary consideration.”

140

These new rights and the shift into a new children-empowering era

challenged the paternalism of earlier periods, as this new era was founded on a

rights paradigm, not a welfare paradigm.

141

Furthermore, this change was part

of a bigger shift associated with the civil rights and women’s rights

movements.

142

Yet the focus on creating a rights paradigm for children was

linked to a collective feeling that children deserved to have rights

143

because of

their humanity and because they should not be treated as second-class citizens.

144

However, “children’s law” is not a single body of law with a coherent set of

principles,

145

even though one common theme extends across the many bodies

of law that apply to children—namely, that the differences associated with

children’s developmental levels justifies distinct treatment in various

contexts.

146

137

. See Cupp, supra note 121, at 11–12; DAVID ARCHARD, CHILDREN: RIGHTS AND CHILDHOOD 70 (2d ed.

2004) (“The roots of the children’s liberation movement lay in the general ferment of the 1960s . . . .”); JOHN T.

PARDECK, CHILDREN’S RIGHTS: POLICY AND PRACTICE 1 (2d ed. 2006) (stating that the children’s rights

movement commenced in the 1960s).

138

. Binford, supra note 119, at 1.

139

. Id.

140

. U.N. Convention on the Rights of the Child art. 3(1), Nov. 20, 1989, 1577 U.N.T.S. 3.

141

. MICHAEL KING, MORAL AGENDAS FOR CHILDREN’S WELFARE 129 (1999) (citing the rights paradigm).

142

. VIRGINIA SMITH, RESHAPING THE WORLD FOR THE 21ST CENTURY: SOCIETY AND GROWTH 80 (2002)

(describing how many different weaker or marginalized groups became more powerful in the 1960s); MARY

ANN GLENDON, RIGHTS TALK: THE IMPOVERISHMENT OF POLITICAL DISCOURSE 5 (1991) (describing the era as

one smitten by the “romance of rights”).

143

. See, e.g., Maria Grahn-Farley, A Theory of Child Rights, 57 U. MIA. L. REV. 867, 878 (2003)

(proposing a new tripartite framework of relationships, responsibilities, and rights that aims to transform how

law treats children and their interactions with others); Anne C. Dailey & Laura A. Rosenbury, The New Law of

the Child, 127 YALE L.J. 1448, 1451 (2018).

144

. RICHARD FARSON, BIRTHRIGHTS: A BILL OF RIGHTS FOR CHILDREN 1 (1974).

145

. Buss, supra note 10, at 42.

146

. Buss, supra note 11, at 267.

374 HASTINGS LAW JOURNAL [Vol. 74:349

E. LEGALLY ENABLED MINORS

According to U.S. contract law, which developed from English law, minors

can enter into contractual transactions,

147

but in a different way than consenting

adults do: minors can choose to void the contracts and thereby avoid having to

perform or honor them.

148

Avoidance is allowed during minority and for a

reasonable time period after reaching adulthood, unless the minor ratifies the

contract as an adult.

149

However, there are two common exceptions to this

general rule. First, minors cannot void contracts for necessities.

150

Second,

disaffirmance requires that minors return the benefits received as consideration

for the contract.

151

Additionally, courts may not allow a minor to void a contract

if an adult supervised the minor while entering into the contract, as that adult’s

supervision presumably mitigates the minor’s lack of capacity.

152

Courts allow

minors to void contracts partly because they do not want adults to exploit or take

advantage of children’s lack of capacity.

153

To do so, courts rely on a developed

common-law standard based on a minor’s age rather than on an assessment of a

minor’s capacity.

154

In light of this framework, commentators have raised concerns that when

transacting online, minors may enter into transactions with adults who may not

147

. See generally, e.g., 5 WILLISTON ON CONTRACTS § 9:5, Westlaw (database updated May 2022); Samuel

Williston, The Progress of the Law, 1919-1920, 34 HARV. L. REV. 741 (1921); Keith A. Rowley, A Brief History

of Anticipatory Repudiation in American Contract Law, 69 U. CIN. L. REV. 565 (2001).

148

. The scholarship has addressed minors’ contractual rights and the use of the infancy defense to disaffirm

online contracts. See Wayne R. Barnes, Arrested Development: Rethinking the Contract Age of Majority for the

Twenty-First Century Adolescent, 76 MD. L. REV. 405, 438–43 (2017) (arguing for a higher age for minors to

enter into contracts); Vivian E. Hamilton, Adulthood in Law and Culture, 91 TUL. L. REV. 55, 61–80 (2016)

(discussing the age of majority); Wallace J. Mlyniec, A Judge’s Ethical Dilemma: Assessing a Child’s Capacity

To Choose, 64 FORDHAM L. REV. 1873, 1900–15 (1996) (analyzing minors’ decision-making capacity);

Jonathan Todres, Maturity, 48 HOUS. L. REV. 1107, 1126 (2012) (advocating for a more legally and culturally

cohesive understanding of individuals’ maturity).

149

. BRIAN A. BLUM & AMY C. BUSHAW, CONTRACTS: CASES, DISCUSSION, AND PROBLEMS 422 (2003).

150

. See, e.g., Cheryl B. Preston & Brandon T. Crowther, Infancy Doctrine Inquiries, 52 SANTA CLARA L.

REV. 47, 52 (2012); Yurek v. Shaffer, 678 S.E.2d 738, 748 (N.C. 2009).

151

. See I.C. ex rel. Solovsky v. Delta Galil USA, 135 F. Supp. 3d 196, 210 (S.D.N.Y. 2015) (preventing a

child from voiding a contract to regain control of her design when her design had gained fame from the other

party’s work); Preston & Crowther, supra note 150, at 50–51 (“A few jurisdictions . . . allow[] the minor to keep

the benefit derived, and even recoup any consideration already transferred to the adult.”).

152

. HOWARD O. HUNTER, MODERN LAW OF CONTRACTS § 2:4, Westlaw (database updated Mar. 2022)

(citing Roe v. Gunnery, Inc., No. HHDCV115035705, 2013 WL 1849284, at *2 (Conn. Super. Ct. Apr. 10,

2013)). For other exceptions, see Preston & Crowther, supra note 150, at 51–63.

153

. E.g., Eriksson v. Nunnink, 233 Cal. Rptr. 234, 245 (Cal. Ct. App. 2015); Doe v. Town of Greenwich,

473 F. Supp. 3d 54, 59 (D. Conn. 2020) (quoting Yale Diagnostic Radiology v. Est. of Harun Fountain, 267

Conn. 351, 356 (2004)) (“The traditional reasoning . . . [is] that the law should protect children from the

detrimental consequences of their youthful and improvident acts . . . . The rule is further supported by a policy

of protecting children from unscrupulous individuals seeking to profit from their youth and inexperience.”);

Cheryl B. Preston & Brandon T. Crowther, Minor Restrictions: Adolescence Across Legal Disciplines, the

Infancy Doctrine, and the Restatement (Third) of Restitution and Unjust Enrichment, 61 U. KAN. L. REV. 343,

356–57 (2012) (explaining that contract law prevents adults from “lur[ing] children into improvident

transactions”).

154

. Preston & Crowther, supra note 150, at 50.

February 2023] FINANCIAL INCLUSION GONE WRONG 375

be able to know precisely how old users are.

155

This is especially concerning

because of how easy it is for children who lack capacity to “click” on contracts

without any understanding of the complex legal jargon and terms that online

service providers reference in their contracts.

156

Some courts have, in the digital

context, broadly enforced contracts against children by determining that children

who benefitted from the use of online services should be held accountable to

their part of the contract.

157

Legal scholarship and courts have discussed

children’s digital contractual rights, including issues such as their online

financial power.

158

[However,] scholars and commentators have been silent regarding property

interests that minors may have in digital assets and whether those property

interests give rise to the right to devise. With the advent of a digital

marketplace and with the significant participation of minors in that

marketplace, capacity standards for minors have begun to evolve, especially

in contract law. Like contracts, property is transitioning into a digital form,

and the law needs to transition with it.

159

III. FINANCIAL INCLUSION GONE WRONG:

SOME REFLECTIONS ON POLICY IMPLICATIONS

A. GAMIFICATION IN A DIGITAL WORLD: CHILDREN’S PHYSICAL AND

MENTAL HEALTH AND DEVELOPMENT

Fintech and DeFi apps and games can help educate people in general, and

children in particular, about the value of money, investing, and even the risks of

trading. However, these apps and games’ ability to do so is largely connected

with their gamification features. This is because gamification makes

challenging, stressful, and anxiety-causing assignments like handling financial

matters feel less intimidating, given the game-like nature of the exercise. In light

of its powerful influence on increased engagement, gamification as a practice

has seen significant growth over the past decade in various areas, ranging from

financial risk management to healthcare, and even to the workplace.

160

155

. Id. at 66.

156

. See Barnes, supra note 148, at 445.

157

. Natalie M. Banta, Minors and Digital Asset Succession, 104 IOWA L. REV. 1699, 1724 (2019); see also

A.V. v. iParadigms, Ltd., 544 F. Supp. 2d 473, 480–81 (E.D. Va. 2008) (enforcing an online service contract

because the minors benefitted by being able to upload their papers for class), aff’d in part and rev’d in part on

other grounds sub nom., A.V. ex rel. Vanderhye v. iParadigms, LLC, 562 F.3d 630 (4th Cir. 2009); C.M.D. v.

Facebook, Inc., No. C 12-1216, 2014 WL 1266291, at *1, *4 (N.D. Cal. Mar. 26, 2014) (allowing Facebook to

use minors’ photos because the minors continued using Facebook).

158

. See, e.g., Cheryl B. Preston, CyberInfants, 39 PEPP. L. REV. 225, 268 (2012) (discussing the spending

power of teens and describing how online transactions have worried commentators); James Chang & Farnaz

Alemi, Gaming the System: A Critique of Minors’ Privilege To Disaffirm Online Contracts, 2 U.C. IRVINE L.

REV. 627, 657 (2012) (discussing financial transactions online).

159

. Banta, supra note 157, at 1703.

160

. See Chad Richards, Craig W. Thompson & T.C. Nicholas Graham, Beyond Designing for Motivation:

The Importance of Context in Gamification, in CHI PLAY 2014: PROCEEDINGS OF THE FIRST ACM SIGCHI

376 HASTINGS LAW JOURNAL [Vol. 74:349

utilizing new technologies in the education world, digital gamified learning has

quickly become a popular teaching tool that is widely used in lower and higher

education environments.

161

Yet, like any tool, gamification has its advantages

and disadvantages, certainly in relation to “playing” with money online and

when the target audience is young users.

One primary disadvantage manifested in the January 2021 Robinhood-

GameStop stock controversy.

162

It raised the concerns of regulators, including

the Chair of the SEC, Gary Gensler,

163

among others,

164

as it became clear that

embedding gamification features in fintech apps increases users’ interest in

them.

165

In particular, “gamified” investment apps like Robinhood that use

behavioral psychology to encourage frequent and often maladaptive trading

activity came under scrutiny.

166

This is not to say that gamification features—

the badges, rewards, score cards, and many other mechanisms that teachers, for

example, have been using for years to interest, excite, reward, and sanction

children—are a bad thing, and that we should deter people from wanting to

“play” more. Indeed, gamification motivates individuals by making experiences

and processes more enjoyable and interactive. When people engage in a task or

project with a more enjoyable, play-like approach, their positive feelings toward

that experience increase, and it is more likely that they will want to continue

engaging in that task or project, perform better at it, and spend more time

working on it, even when they are not required to do so.

167

Therefore, it is not

surprising that fintech apps’ gamification features make investing and trading

more appealing to all, including young users, who have opened investing and

ANNUAL SYMPOSIUM ON COMPUTER-HUMAN INTERACTION IN PLAY, 217, 217–26 (2014). See generally

WERBACH & HUNTER, supra note 17.

161

. See, e.g., Ian Glover, Play as You Learn: Gamification as a Technique for Motivating Learners, in

PROCEEDINGS OF WORLD CONFERENCE ON EDUCATIONAL MULTIMEDIA, HYPERMEDIA AND

TELLECOMMUNICATIONS 1999, 2000 (J. Herrington et al. eds., 2013); Theresa A. Papp, Gamification Effects

on Motivation and Learning: Application to Primary and College Students, 8 INT’L J. FOR CROSS-DISCIPL.

SUBJECTS EDUC. 3193, 3195–3201 (2017).

162

. Oscar Gonzalez & David Priest, Robinhood Backlash: What You Should Know About the GameStop

Stock Controversy, CNET (Mar. 17, 2021, 3:42 PM), https://www.cnet.com/personal-finance/investing

/robinhood-backlash-what-you-should-know-about-the-gamestop-stock-controversy/.

163

. Bob Pisani, SEC Chair Gary Gensler Raises Concerns About Robinhood, Trading Gamification and

Social Media Hype, CNBC, https://www.cnbc.com/2021/05/06/sec-chair-gary-gensler-raises-concerns-about-

robinhood-trading-gamification-and-social-media-hype.html (May 6, 2021, 9:51 AM).

164

. Julia Boorstin, Robinhood’s Disruptive Force: The Good, the Bad and the Controversy, CNBC,

https://www.cnbc.com/2021/05/25/robinhoods-disruptive-trade-the-good-the-bad-and-the-controversy.html

(May 25, 2021, 7:55 AM).

165

. See, e.g., Annie Massa & Tracy Alloway, Robinhood’s Role in the ‘Gamification’ of Investing,

BLOOMBERG, https://www.bloomberg.com/news/articles/2020-12-19/robinhood-s-role-in-the-gamification-of-

investing-quicktake (July 15, 2021, 9:00 PM).

166

. Kyle Langvardt & James Fallows Tierney, On “Confetti Regulation”: The Wrong Way To Regulate

Gamified Investing, 131 YALE L.J.F. 717, 717 (2022).

167

. Fiona Fui-Hoon Nah, Venkata Rajasekhar Telaprolu, Shashank Rallapalli & Pavani Rallapalli Venkata,

Gamification of Education Using Computer Games, in HUMAN INTERFACE AND THE MANAGEMENT OF

INFORMATION: INFORMATION AND INTERACTION FOR LEARNING, CULTURE, COLLABORATION, AND BUSINESS 99,

99 (2013).

February 2023] FINANCIAL INCLUSION GONE WRONG 377

trading accounts on such apps en masse like never before.

168

But one of the

concerns with this dramatic increase in retail investor participation is that

although using frictionless, highly gamified digital apps may seem easy and fun

to young first-time investors, in reality, the stock market is likely the toughest

place to earn money, and losing money is anything but fun.

169

Despite considerable literature examining retail investment and in-depth

research on the impact of new media and digital platforms on financial

markets,

170

and legal scholarship on gambling

171

and the regulation of

behavior,

172

academics have rarely discussed digital apps and games that direct

168

. See, e.g., Angelita Williams & Eric Young, New Research: Global Pandemic Brings Surge of New and

Experienced Retail Investors into the Stock Market, FINRA (Feb. 2, 2021), https://www.finra.org/media-

center/newsreleases/2021/new-research-global-pandemic-brings-surge-new-and-experienced-retail.

169

. See, e.g., Yun Li, Options Trading Activity Hits Record Powered by Retail Investors, but Most Are

Playing a Losing Game, CNBC, https://www.cnbc.com/2021/12/22/options-trading-activity-hits-record-

powered-by-retail-investors.html (Dec. 22, 2021, 9:16 PM) (“A record of 39 million options contracts have

traded daily on average this year, rising 35% from 2020. Retail investors now account for more than 25% of this

trading activity. However, the majority of these small-time traders are buying the most basic call and put options,

which have a much lower probability of profit compared with advanced strategies like options spreads . . . .

[Also,] [i]n most cases, novice retail investors are paying more for bets with a lower probability of profit when

a cheaper call spread with much higher chance of profit exists.”); Nithin Kamath, No Easy Money: Less Than

1% Active Traders Beat Bank FDs, ECON. TIMES, https://economictimes.indiatimes.com/markets/stocks/news

/no-easy-money-less-than-1-active-traders-beat-bank-fds/articleshow/88656009.cms?utm_source=contentof

interest&utm_medium=text&utm_campaign=cppst (Jan. 3, 2022, 5:39 PM) (“We’ve seen a record number of

new traders and investors in 2021. . . . In the long run, the stock market is probably the toughest place in the

world to make easy money. Thanks to social media, countless people are lured into the markets and have a rosy

view of trading. But the reality is less than 1% of active traders earn more money than a bank fixed deposit over

a 3-year period.”).

170

. See, e.g., Eric C. Chaffee, Securities Regulation in Virtual Space, 74 WASH. & LEE L. REV. 1387, 1390

(2017); Joshua Mitts, A Legal Perspective on Technology and the Capital Markets: Social Media, Short Activism

and the Algorithmic Revolution 1 (Columbia L. & Econ., Working Paper No. 615, 2019), https://ssrn.com

/abstract=3447235; Frank Pasquale, Law’s Acceleration of Finance: Redefining the Problem of High-Frequency

Trading, 36 CARDOZO L. REV. 2085, 2086 (2015); Benjamin P. Edwards, The Rise of Automated Investment

Advice: Can Robo-Advisers Rescue the Retail Market?, 93 CHI.-KENT L. REV. 97, 98 (2018); Van Loo, supra

note 62, at 232; Brummer & Yadav, supra note 62, at 235; Nizan Geslevich Packin, Consumer Finance and AI:

The Death of Second Opinions?, 22 N.Y.U. J. LEGIS. & PUB. POL’Y 319, 319 (2020); Kristin Johnson, Frank

Pasquale & Jennifer Chapman, Artificial Intelligence, Machine Learning, and Bias in Finance: Toward

Responsible Innovation, 88 FORDHAM L. REV. 499, 499 (2019); Juan Pablo Pardo-Guerra, Where Are the Market

Devices? Exploring the Links Between Regulation, Markets, and Technology at the Securities and Exchange

Commission, 1935-2010, 49 THEORY & SOC’Y 245, 271 (2020).

171

. See, e.g., Marc Edelman, Navigating the Legal Risks of Daily Fantasy Sports: A Detailed Primer in

Federal and State Gambling Law, 2016 U. ILL. L. REV. 117, 117 (2016); Daily Fantasy Sports: Issues and

Perspectives: Hearing Before the H. Subcomm. on Com., Mfg., & Trade of the Comm. on Energy & Com., 114th

Cong. (2016) (prepared written statement of Ryan M. Rodenberg, Professor, Florida State University); Hibai

Lopez-Gonzalez & Mark D. Griffiths, Is European Online Gambling Regulation Adequately Addressing In-Play

Betting Advertising?, 20 GAMING L. REV. & ECON. 495, 495–503 (2016).

172

. See, e.g., Kyle Langvardt, Regulating Habit-Forming Technology, 88 FORDHAM L. REV. 129, 129

(2019) (discussing technology’s influence on behavior and explaining that regulators should look to analogous

regulatory techniques for addressing similar harms from other addictive technologies); OREN BAR-GILL,

SEDUCTION BY CONTRACT: LAW, ECONOMICS, AND PSYCHOLOGY IN CONSUMER MARKETS 1 (2012) (discussing

behavioral incentives to consumers and investors and explaining how consumer contracts emerge from the

interaction between market forces and consumer psychology); YUVAL FELDMAN, THE LAW OF GOOD PEOPLE:

CHALLENGING STATES’ ABILITY TO REGULATE HUMAN BEHAVIOR 1 (2018) (wondering whether we can

effectively regulate human behavior).

378 HASTINGS LAW JOURNAL [Vol. 74:349

retail traders’ attention and influence their investments in general, and children’s

in particular.

173

Children, innovative financial services, and investments have

never been examined together, leaving a serious gap in the legal literature. In

2021, focusing on broader issues, including the gamification features of

financial services, the SEC sought to better understand the potential

disadvantages associated with digital engagement practices by soliciting public

comment on these features of online fintech service providers.

174

This request

for public feedback was also a call for interdisciplinary literature in technology,

psychology, and the law

175

that would focus on the potential disadvantages

associated with gamification;

176

it did not, however, specifically mention

children and emerging adults. Similarly, FINRA requested public feedback

regarding its identified “risks associated with app-based platforms and ‘game-

like’ features . . . intended to influence customers.”

177

These requests for public

input are important. Digital games are entertaining and widely used,

178

but they

are especially problematic when dealing with young users. Researchers have

found digital gaming to be an addictive activity for children

179

that contributes

to screen-time addiction and causes health disorders.

180

Additionally, and no less important, interactive “game-like” features such

as point scoring, competitions among peers, and rules of play

181

can increase

children’s interest not just in online gaming, but also in other game-like

activities. For instance, among such related activities are esports bets, which

have an almost inherent appeal to children, teens, and young adults

182

and can

173

. Jerry Markham mentions the Massachusetts securities regulators’ lawsuit against Robinhood. Jerry W.

Markham, Regulating Broker-Dealer Investment Recommendations–Laying the Groundwork for the Next

Financial Crisis, 13 DREXEL L. REV. 377, 443 n.396 (2021). Additionally, several academic notes have also

touched upon legal issues surrounding trading apps that democratize investing via technology. See, e.g., John R.

Fallon, Note, Equal Access to Investments: At Whose Expense?, 21 WAKE FOREST J. BUS. & INTELL. PROP.

L. 431, 467 (2021); Travis C. Studdard, Riling Up as Recommendation: How Commission-Free Brokerages

Recommend Active Investing to the Public, 29 PUB. INVS. ADVOC. BAR ASS’N BAR J. 67, 67 (2022).

174

. Request for Information and Comments on Broker-Dealer and Investment Adviser Digital Engagement

Practices, Exchange Act Release No. 34-92766, 86 Fed. Reg. 49067, 49071 (Sept. 1, 2021) (requesting

information and comments on broker-dealer and investment-adviser digital engagement practices).

175

. Langvardt & Tierney, supra note 166, at 717.

176

. Tierney, supra note 106, at 353.

177

. FINRA, 2021 REPORT ON FINRA’S EXAMINATION AND RISK MONITORING PROGRAMS 2 (2021),

https://www.finra.org/sites/default/files/2021-02/2021-report-finras-examination-risk-monitoring-program.pdf.

178

. Jacob Leon Kröger, Philip Raschke, Jessica Percy Campbell & Stefan Ullrich, Surveilling the Gamers:

Privacy Impacts of the Video Game Industry, 44 ENT. COMPUTING (forthcoming Jan. 2023), https://ssrn.com

/abstract=3881279 (“With many million users across all age groups and income levels, video games have

become the world’s leading entertainment industry.”).

179

. Saving Children from Digital Gaming Addiction, EDUCATIONWORLD, https://www.educationworld.in

/saving-children-from-digital-gaming-addiction/ (last visited Jan. 28, 2023).

180

. See Anya Kamenetz, Is ‘Gaming Disorder’ an Illness? WHO Says Yes, Adding It to Its List of Diseases,

NPR (May 28, 2019, 5:48 PM), https://www.npr.org/2019/05/28/727585904/is-gaming-disorder-an-illness-the-

who-says-yes-adding-it-to-its-list-of-diseases.

181

. Melanie Waddell, FINRA Targets ‘Game-Like’ Digital Platforms, THINKADVISOR (Feb. 3, 2021),

https://www.thinkadvisor.com/2021/02/03/finra-examiners-eye-game-like-digital-platforms/.

182

. See, e.g., Raffaello Rossi & Agnes Nairn, How Children Are Being Targeted with Hidden Ads on Social

Media, YAHOO FIN. (Nov. 3, 2021), https://uk.news.yahoo.com/children-being-targeted-hidden-ads-122439705.

February 2023] FINANCIAL INCLUSION GONE WRONG 379

result in gambling addictions.

183

Similarly, scholars argue that social media apps

function like casinos, in that they are designed to make users lose their sense of

time with videos that start automatically and content feeds that can scroll on to

infinity in attempts to keep children glued to their devices.

184

Put in simpler

terms, digital games can function like “hard drugs” for children.

185

Being online,

predominantly by web surfing or playing in interactive platforms, “acts like a

stimulant,” like caffeine or cocaine.

186

The dopamine released by the stimulation

from electronics hits children and teens particularly virulently because their

cerebral cortexes are not fully developed to enable them to feel satisfied with

small doses or to self-regulate.

187

So whether it is earning points in an

unsophisticated video game, spending real money to acquire abilities in

Roblox,

188

or trading stocks in a fintech app—an activity that is not only very

addictive,

189

but also that 12% of young investors said they started because it

“felt like a game”

190

—it is extremely difficult for children to stop and turn off

their digital devices.

But increased screen time not only means more excitement and hours of

games; it also has a negative effect on children’s physical and mental

development. For example, increased screen time is linked to a higher risk of

cognitive, linguistic, and emotional delays;

191

complications with children’s

social-emotional advancement; decreased ability to self-regulate; problems

183

. Raffaello Rossi & Agnes Nairn, Esports Could Be Quietly Spawning a Whole New Generation of

Problem Gamblers, THE CONVERSATION (Oct. 1, 2020, 11:37 AM), https://theconversation.com/esports-could-

be-quietly-spawning-a-whole-new-generation-of-problem-gamblers-147124.

184

. Why Social Media Apps Are Like Casinos for Children, DOT.LA (Mar. 21, 2022), https://dot.la/social-

media-addiction-2657010894.html (citing Ed Howard, senior counsel at the University of San Diego School of

Law’s Children’s Advocacy Institute).

185

. Marika Lindholm, Parenting in the Era of Addictive Electronics, PSYCH. TODAY (July 13, 2017),

https://www.psychologytoday.com/us/blog/more-women-s-work/201707/parenting-in-the-era-addictive-

electronics.

186

. Id.

187

. Id.

188

. Noah Brode, Half of Roblox Users Say They’re Spending Money on the Platform Each Month,

CIVICSCI. (Oct. 26, 2020), https://civicscience.com/half-of-roblox-users-say-theyre-spending-money-on-the-

platform-each-month/.

189

. Coryanne Hicks, How To Tell If You’re Addicted to Day Trading, U.S. NEWS (Apr. 22, 2019),

https://money.usnews.com/investing/investing-101/articles/how-to-tell-if-youre-addicted-to-day-trading; see

also Riccardo Guglielmo, Lucia Ioime & Luigi Janiri, Is Pathological Trading an Overlooked Form of

Addiction?, 8 ADDICTION & HEALTH 207, 207–09 (2016), https://www.ncbi.nlm.nih.gov/pmc/articles

/PMC5422017/pdf/AHJ-08-207.pdf (outlining the “negative financial and psychosocial consequences” of

pathological trading).

190

. Emily Graffeo, A Third of Young Traders Go to Social Media for Investment Advice – and 12% Say

They Invest Because It ‘Feels Like a Game,’ Survey Finds, BUS. INSIDER (Aug. 23, 2021, 7:30 AM),

https://markets.businessinsider.com/news/stocks/retail-investing-trends-robinhood-gamification-survey-social-

media-trading-2021-8.

191

. Andrea Petersen, Is Your Child a Digital Addict? Here’s What You Can Do, N.Y. TIMES (Apr. 15,

2020), https://www.nytimes.com/2020/04/15/parenting/big-kid/child-screen-addiction.html.

380 HASTINGS LAW JOURNAL [Vol. 74:349

developing the skills necessary to learn and apply math and science concepts;

192

increased anxiety; and even a tendency toward dishonesty in children.

193

The

law has always “recognize[d] that children’s differences associated with their

ongoing development justifies distinct treatment in a wide variety of regulatory

contexts”;

194

understanding children’s developmental differences in this context

is critical and merits a more protective legal treatment of children.

Finally, while many children and emerging adults think of digital games

and interactive social media apps as fun and innocent entertainment, in reality,

these games and apps pose a serious threat to consumers’ data and privacy,

195

especially when used by young, more naïve, and inexperienced users. Indeed,

such users are often surveilled, and their choices, data, and even weaknesses are

monetized and exploited, whether by parties trying to take advantage of

inexperienced minors or by mainstream business models and schemes such as

payment for order flow.

196

B. THE SERIOUSNESS OF MONEY

Gamifying investing makes it feel less serious, not more serious,

contravening the very notion that early education will help young adults

understand the seriousness of money. Indeed, gamification oversimplifies

investing to the point that game outcomes lead novice investors to get in way

over their heads.

197

Gamification for financial services is becoming the new

192

. Joanna Walters, Tablets and Smartphones May Affect Social and Emotional Development, Scientists

Speculate, THE GUARDIAN (Feb. 2, 2015, 11:28 AM), https://www.theguardian.com/technology/2015/feb/01

/toddler-brains-research-smartphones-damage-social-development.

193

. Screen Dependency Disorder: The Effects of ‘Screen Time’ Addiction, NEUROHEALTH (Feb. 11, 2020),

https://nhahealth.com/screen-dependency-disorder-the-effects-of-screen-time-addiction/.

194

. Buss, supra note 11, at 267.

195

. See Kröger et al., supra note 178 (“Since the workings of data collection and data mining are

completely invisible to ordinary video game users, it can be impossible for them to understand and control what

information is revealed. Sophisticated surveillance and assessment mechanisms can be imperceptibly woven

into the fabric of game environments and storylines. The immersive and distractive nature of video games may

further impede a reasonable reflection on the staggering scope of the data harvesting taking place and on potential

data misuses. Considering the immense and growing popularity of video gaming, consumer education in this

field is urgently needed, along with effective technical and legal safeguards.”).

196

. See Theresa W. Carey, Payment for Order Flow (PFOF): Definition, How It Works, INVESTOPEDIA,

https://www.investopedia.com/terms/p/paymentoforderflow.asp (July 4, 2022); see also, e.g., Matt Levine,

People Are Worried About Payment for Order Flow, BLOOMBERG (Feb. 5, 2021, 9:09 AM),

https://www.bloomberg.com/opinion/articles/2021-02-05/robinhood-gamestop-saga-pressures-payment-for-

order-flow; Divya Seth, Payment-for-Order-Flow Implications for Robinhood Users 1 (Mar. 13, 2020)

(unpublished manuscript), https://ssrn.com/abstract=3779648 (highlighting problems associated with PFOF,

assessing policies allowing it, and exploring policy alternatives); David Easley, Nicholas M. Kiefer & Maureen

O’Hara, Cream-Skimming or Profit-Sharing? The Curious Role of Purchased Order Flow, 51 J. FIN. 811, 812–

13 (1996).

197

. Emma Stamm, Robinhood’s Gamification of Investing Combines Surveillance Capitalism with Finance

Capitalism, VICE (Dec. 1, 2020, 6:00 AM), https://www.vice.com/en/article/z3vm79/robinhood-the-

gamification-of-investing-and-a-is-creating-a-new-type-of-economic-inscrutability.

February 2023] FINANCIAL INCLUSION GONE WRONG 381

frontier for Generation Z

198

and even Generation Alpha,

199

who have enjoyed

platforms such as Fortnite

200

and Brawl Stars

201

since infancy. Indeed, video

games now make up the most significant entertainment market in the world in

terms of size and magnitude.

202

Moreover, with the dawn of the new metaverse

era,

203

cryptoassets such as NFTs

204

are beginning to play a central role in digital

games.

205

But Generations Z and Alpha are taking this gamification-of-finance

trend one step further. Using new platforms and apps such as the Sandbox

198

. Joe Pinsker, Oh No, They’ve Come Up with Another Generation Label, THE ATLANTIC (Feb. 21, 2020),

https://www.theatlantic.com/family/archive/2020/02/generation-after-gen-z-named-alpha/606862/; Kate

Lindsay, Are You Sure You’re Not Guilty of the ‘Millennial Pause’?, THE ATLANTIC (Aug. 6, 2022),

https://www.theatlantic.com/technology/archive/2022/08/tiktok-gen-z-millennial-pause-parody/671069/.

199

. Pinsker, supra note 198.

200

. Epic Games’ Fortnite, which has about 250 million active players, is probably the most popular video

game in the world and generated approximately $3 billion in 2018 alone—profits far above those of the highest-

grossing movie. Jon Russell, Epic Games, the Creator of Fortnite, Banked a $3 Billion Profit in 2018,

TECHCRUNCH (Dec. 27, 2018, 7:44 AM), https://techcrunch.com/2018/12/27/epic-fortnite-3-billion-profit/. One

of the most financially successful movies of all time is Avengers: Endgame, which is estimated to have earned

$2.80 billion to date. Josh Jackson, The Top 20 Highest-Grossing Movies of All Time Worldwide, PASTE MAG.

(Aug. 11, 2021, 4:14 PM), https://www.pastemagazine.com/movies/highest-grossing-movies/the-highest-

grossing-movies-of-all-time/.

201

. Supercell—based in Helsinki and responsible for several tremendously successful gaming platforms,

including Brawl Stars, which went global in December 2018—published in February 2022 its reported revenues

of $2.24 billion and a before-tax profit of $852 million for 2021, thanks to its 250 million monthly active players.

See Dean Takahashi, Supercell Makes $852M on $2.24 Billion in 2021 Revenue, VENTUREBEAT: GAMESBEAT

(Feb. 15, 2022, 12:30 AM), https://venturebeat.com/2022/02/15/supercell-makes-852m-on-2-24-billion-in-2021

-revenue/.

202

. Shani Shisha, Fairness, Copyright, and Video Games: Hate the Game, Not the Player, 31 FORDHAM

INTELL. PROP. MEDIA & ENT. L.J. 694, 697–98 (2021) (“A recent study also suggests that some players think of

Fortnite as their primary social media platform. Moreover, a recent poll found that a whopping 75% of

Americans have at least one video game player in their household. Video games have likewise crept into other

fora of mass media, and a growing cascade of movies and television shows are now premised on (or inspired

by) video games—a clear indication of the cultural force that drives the video game market.”).

203

. See, e.g., Brian X. Chen, What’s All the Hype About the Metaverse?, N.Y. TIMES (Jan. 18, 2022),

https://www.nytimes.com/2022/01/18/technology/personaltech/metaverse-gaming-definition.html; Nico Grant,

YouTube Plans To Make Gaming Videos Immersive in Metaverse Push, BLOOMBERG (Feb. 10, 2022, 6:00 AM),

https://www.bloomberg.com/news/articles/2022-02-10/youtube-plans-to-make-gaming-videos-immersive-in-

metaverse-push.

204

. Katya Fisher, Once Upon a Time in NFT: Blockchain, Copyright, and the Right of First Sale Doctrine,

37 CARDOZO ARTS & ENT. L.J. 629, 631 (2019); Taylor Locke, NFT Trading Volume Hit $10.7 Billion Last

Quarter—Here Are 2 Reasons Why People Are Spending Thousands on Digital Assets, CNBC (Oct. 6, 2021,

10:29 AM), https://www.cnbc.com/2021/10/06/nft-trading-volume-hit-10-billion-2-reasons-why-people-are-

buying.html; Jane Hanson, The NFT Market Is Exploding and Women Are Taking Charge, FORBES (Nov. 30,

2021, 8:00 AM), https://www.forbes.com/sites/janehanson/2021/11/30/the-nft-market-is-exploding-and-

women-are-taking-charge/?sh=214825e042b0.

205

. See, e.g., Justin Birnbaum, Why Video Game Makers See Huge Potential in Blockchain—and Why

Problems Loom for Their New NFTs, FORBES (Jan. 6, 2022, 7:00 AM), https://www.forbes.com/sites

/justinbirnbaum/2022/01/06/why-video-game-makers-see-huge-potential-in-blockchain-and-why-problems-

loom-for-their-new-nfts/?sh=12b38ee343d7 (“Gaming-related NFTs generated $4.8 billion of revenue in 2021,

according to data from DappRadar, and represented roughly 20% of all NFT sales during the year, which

includes popular items from NBA Top Shot, CryptoPunks and Board Ape Yacht Club.”); Julian Dossett, The

Video Game Industry Was Hot on NFTs. Then Came Hacks and a Market Meltdown, CNET (July 8, 2022, 5:00

AM), https://www.cnet.com/personal-finance/crypto/features/nfts-are-coming-for-your-video-games-players-

get-ready/.

382 HASTINGS LAW JOURNAL [Vol. 74:349

Alpha—which enables and encourages users to create, share, and sell digital

assets like NFTs as part of a game and to receive financial incentives for doing

so—users are encouraged to play, earn, and share digital assets and rewards with

others.

206

Regulation almost always lags behind innovation,

207

but regulators are now

realizing that fintech apps and their playful interfaces have lured a new class of

inexperienced and very young investors into the financial markets. And although

Robinhood took most of the fire for doing so—with regulators filing complaints

against it

208

and Congress criticizing its business model and investor protection

procedures

209

—Robinhood is far from the only player in this new, entertaining

space. Other fintech platforms such as WeBull and EToro have also captured the

attention of inexperienced young traders,

210

who often base their financial

decisions on social media content and on not wanting to “miss out”—a sentiment

some of these platforms used to lure in young users through widely criticized

Super Bowl commercials.

211

Indeed, according to a new study, social media is

the most popular outlet for investment research for Generation Z and Generation

Alpha retail investors.

212

These young traders are born investment “researchers,”

when researching entails browsing TikTok and YouTube videos under trading-

related hashtags or scrolling through the 100 most-held stocks among their

206

. See Tassi, supra note 91. The Sandbox Alpha, for example, calls users to “[s]tep into the Metaverse!

Your chance to join the launch of a new era of gameplay is fast approaching . . . . [T]he Sandbox Alpha is an

open multi-week Play-to-Earn event . . . in which players will have the opportunity to explore The Sandbox

Metaverse” and earn NFT rewards. Introducing The Sandbox Alpha, MEDIUM (Nov. 16, 2021), https://medium

.com/sandbox-game/introducing-the-sandbox-alpha-2052db44a9f9; see also Beatrice Mastropietro, What Is an

Initial Game Offering (IGO)?, COINSPEAKER (Nov. 3, 2021, 7:01 PM), https://www.coinspeaker.com/guides

/what-is-an-initial-game-offering-igo/ (“IGO stands for Initial Game offering, a new business model that

combines the video game industry with crowdfunding. By combining these two industries, IGOs can reach out

to their audience and gain more revenue by selling virtual items.”).

207

. John W. Bagby & Nizan G. Packin, RegTech and Predictive Lawmaking: Closing the RegLag Between

Prospective Regulated Activity and Regulation, 10 MICH. BUS. & ENTREPR. L. REV. 127, 127 (2021).

208

. Annie Massa & Michael McDonald, Robinhood Accused of ‘Gamification’ of Trading by

Massachusetts Regulator, FIN. POST (Dec. 16, 2020), https://financialpost.com/investing/robinhood-accused-of-

gamification-of-trading-by-massachusetts-regulator.

209

. Andrew Ross Sorkin, Jason Karaian, Michael J. de la Merced, Lauren Hirsch & Ephrat Livni,

‘Something Very Wrong Happened Here,’ N.Y. TIMES, https://www.nytimes.com/2021/02/19/business

/dealbook/robinhood-hearing-congress.html (Mar. 12, 2021).

210

. See Michael Wursthorn & Euirim Choi, Does Robinhood Make It Too Easy To Trade? From Free

Stocks to Confetti, WALL ST. J., https://www.wsj.com/articles/confetti-free-stocks-does-robinhoods-design-

make-trading-too-easy-11597915801 (Aug. 20, 2020, 2:53 PM).

211

. See, e.g., Taylor Locke, ‘To the Moon’: You Probably Saw the Crypto Super Bowl Ads—Here’s What

To Know Before Buying In on the Hype, CNBC, https://www.cnbc.com/2022/02/14/what-to-know-about-crypto-

before-buying-into-super-bowl-ads.html (Feb. 15, 2022, 11:29 AM) (“While watching the Super Bowl, you

probably saw some interesting advertisements by cryptocurrency companies like FTX, eToro and Crypto.com,

among others, touting crypto to the masses. . . . It can be exciting, and for some, there’s a real fear of missing

out. But it’s important to understand the risks of cryptocurrency before buying in. It may be difficult to take a

step back amid the hype . . . .”).

212

. See Graffeo, supra note 190.

February 2023] FINANCIAL INCLUSION GONE WRONG 383

fellow app users.

213

But cool and fun fintech platforms do not make younger

generations appropriately cautious about losing significant amounts of money,

even though that is typically the case. For example, a 2016 study showed that

80% of private day traders lost money over the course of a year, with a median

annual return of 36% loss for all traders.

214

And although financial losses are

objectively upsetting, they are especially devastating to children and emerging

adults taking their first steps in the financial markets, as was the case with

twenty-year-old Alex Kearns, who committed suicide believing he owed

$750,000 for stock market losses on Robinhood.

215

C. THE INFLUENCE OF OUTSIDE PARTIES ON CHILDREN’S FINANCIAL

CHOICES

Social influence plays a significant role in marketing, decision-making, and

even financial behavior.

216

However, the level of popularity of the online social-

influence industry in recent years has been beyond anyone’s imagination.

217

Moreover, the increasing involvement of influencers in the stock market ranging

from TikTok videos, which have become known as “FinTok,”

218

to Roaring

Kitty’s call on Reddit to hold or buy stocks,

219

and even to Kim Kardashian’s

viral post soliciting her 280 million followers to buy a cryptocurrency, has

proven that social influencing has advanced to an entirely new level.

220

But

213

. Id. (“35% of investors aged 18-34 say they get investment ideas from social media, compared with

15% of investors age 35-64.”).

214

. Almost 80% of Private Day Traders Lose Money, CURIOUSGNU (Aug. 17, 2016), https://www.curious

gnu.com/day-trading.

215

. Tony Dokoupil, Michael Kaplan, Martin Finn, Cassidy McDonald, Jennie Kamin & Rob Kaplan, Alex

Kearns Died Thinking He Owed Hundreds of Thousands for Stock Market Losses on Robinhood. His Parents

Have Sued over His Suicide., CBS NEWS, https://www.cbsnews.com/news/alex-kearns-robinhood-trader-

suicide-wrongful-death-suit/ (Feb. 8, 2021, 2:03 PM).

216

. See, e.g., Sarah Halzack, Social Media ‘ Influencers’: A Marketing Experiment Grows into a Mini-

Economy, WASH. POST (Nov. 2, 2016), https://www.washingtonpost.com/business/economy/social-media-

influencers-a-marketing-experiment-thats-metastasized-into-a-mini-economy/2016/11/02/bf14e23a-9c5d-

11e6-9980-50913d68eacb_story.html.

217

. Kelly Callahan, CGI Social Media Influencers: Are They Above the FTC’s Influence?, 16 J. BUS. &

TECH. L. 361, 367 (2021) (“In 2019, 3.5 billion people used social media, which is approximately 45% of the

world’s population. People spent 33% of the time they spent online using social media. Almost 50% of

consumers rely on social media influencers when making purchasing decisions, which makes social media

influencers powerful marketing weapons.”).

218

. See, e.g., Alicia McElhaney, Welcome to FinTok, Where Day Trading, Options Investing, and

Misinformation Reign, INST’L INV. (Sept. 25, 2020), https://www.institutionalinvestor.com/article

/b1njqf7rw75qyx/Welcome-to-FinTok-Where-Day-Trading-Options-Investing-and-Misinformation-Reign;

Tara Siegel Bernard, Trade Stock Tips on TikTok, Newbies Are Deeply Invested in Learning, N.Y. TIMES,

https://www.nytimes.com/2021/04/28/your-money/stocks-investing-tiktok.html (June 21, 2021).

219

. Nathaniel Popper & Kellen Browning, The ‘Roaring Kitty’ Rally: How a Reddit User and His Friends

Roiled the Markets, N.Y. TIMES (Jan. 29, 2021), https://www.nytimes.com/2021/01/29/technology/roaring-

kitty-reddit-gamestop-markets.html.

220

. Ellen Milligan, Kardashian’s Instagram Crypto Plug Irks U.K. Finance Watchdog, BLOOMBERG (Sept.

6, 2021, 8:29 AM), https://www.bloomberg.com/news/articles/2021-09-06/kardashian-s-instagram-crypto-

plug-irks-u-k-finance-watchdog.

384 HASTINGS LAW JOURNAL [Vol. 74:349

children’s and emerging adults’

221

investment choices are particularly

susceptible to the influence of outside parties. Simply put, younger individuals

are more vulnerable, as it is easier to exploit consumers

222

who are easily,

immorally, and unethically manipulated by hidden marketing, advertising, and

specific agenda content.

223

As a result, child-targeted advertising has become a

multibillion dollar endeavor in the United States, with $4.2 billion spent on

marketing to children in 2018 alone.

224

Even educational apps for preschoolers

are flooded with manipulative content and structured in a way that shames

children into spending money within the apps by making them believe that

spending or buying is the correct solution or way to progress.

225

Children are

also more influenced by herd mentality, including when it comes to their

financials. Because they want to appear “cool” before their peers, teens cite

“friends” as the strongest influence over their financial decisions.

226

In fact, 80%

of Generation Z’s purchases were influenced by social media.

227

Likewise, some

221

. Jeffrey Jensen Arnett, Emerging Adulthood: A Theory of Development from the Late Teens Through

the Twenties, 55 AM. PSYCH. 469, 471 (2000) (identifying emerging adults as individuals who are eighteen to

twenty-five years old); Craig M. Bennett & Abigail A. Baird, Anatomical Changes in the Emerging Adult Brain:

A Voxel-Based Morphometry Study, 27 HUM. BRAIN MAPPING 766, 766 (2006) (describing research that

suggests that the human brain is not aware of the legal and societal milestone that turning eighteen signifies in

our society); Melissa S. Caulum, Postadolescent Brain Development: A Disconnect Between Neuroscience,

Emerging Adults, and the Corrections System, 2007 WIS. L. REV. 729, 730–31 (“[Although the legal age of

adulthood is eighteen,] research suggests that, structurally, the human brain is not aware of this societal

milestone. Scientists are just beginning to conduct studies to determine why people change so drastically after

they reach the age of eighteen, but it is clear that the seven-year period between eighteen and twenty-five is full

of significant changes in both environment and responsibility.”).

222

. See, e.g., RAFFAELLO ROSSI & AGNES NAIRN, WHAT ARE THE ODDS? THE APPEAL OF GAMBLING

ADVERTS TO CHILDREN AND YOUNG PERSONS ON TWITTER 6 (2021), https://www.bristol.ac.uk/media-

library/sites/management/documents/what-are-the-odds-rossi-nairn-2021.pdf (conducting a study focused on

gambling-content marketing on three different age groups in the United Kingdom that found that gambling-

content marketing posts were nearly four times more appealing to users between ages seventeen and twenty-

four, than to users over twenty-five).

223

. See Rossi & Nairn, supra note 182 (“When presented with content marketing, it is nearly impossible

for children to immediately recognise the posts’ persuasive intent. And while young adults might be able to

recognise that the posts are advertising, they find it much harder than older people to resist being persuaded. So

neither group is likely to make the mental counter arguments needed to resist being taken in by content

marketing.”); Survey: Most Americans Believe Advertising to Children Is Unethical and Advertisers Should Stop

Marketing to Kids Under 8 Years Old, CISION PR NEWSWIRE (Nov. 17, 2020, 8:38 AM), https://www.prnews

wire.com/news-releases/survey-most-americans-believe-advertising-to-children-is-unethical-and-advertisers-

should-stop-marketing-to-kids-under-8-years-old-301174474.html [hereinafter Stop Marketing to Kids].

224

. See Stop Marketing to Kids, supra note 223.

225

. Chavie Lieber, Apps for Preschoolers Are Flooded with Manipulative Ads, According to a New Study,

VOX (Oct. 30, 2018, 6:00 PM), https://www.vox.com/the-goods/2018/10/30/18044678/kids-apps-gaming-

manipulative-ads-ftc.

226

. Piper Jaffray Completes 25th Semi-Annual “Taking Stock with Teens” Market Research Project, PIPER

SANDLER (Apr. 10, 2013, 6:01 PM), https://www.pipersandler.com/2col.aspx?id=287&releaseid=1805593

[https://web.archive.org/web/20220305215339/https://www.pipersandler.com/2col.aspx?id=287&releaseid=18

05593].

227

. Cara Salpini, Study: 80% of Gen Z Purchases Influenced by Social Media, RETAILDIVE (July 17,

2017), https://www.retaildive.com/news/study-80-of-gen-z-purchases-influenced-by-social-media/447249/.

February 2023] FINANCIAL INCLUSION GONE WRONG 385

children purchase “follows”

228

and “likes” for money

229

to appear more admired

or cool. And digital platforms exploit these fears of missing out and desires for

social acceptance, which indirectly affect children’s anxiety.

230

Digital

platforms like Venmo or Instagram have enabled users to immediately see what

others are spending their money and time on, or when they have been left out of

an activity by their peers.

231

This has contributed to the rise of depression among

children,

232

which might be linked to the rise in youth suicide, which has nearly

tripled in the last decade for ten- to fourteen-year-olds.

233

This means that digital

platforms, apps, or games that make products or services available for children

must be legally required to meet certain increased consumer protection standards

and careful scrutiny, especially if they include financial services or products.

Indeed, as mentioned above, the law has always recognized that differences

between children and adults associated with children’s ongoing development

justify distinct treatment in a wide variety of regulatory contexts.

234

Again, this

understanding of those developmental differences in this context is critical.

D. DEBT, CREDIT, AND FINANCIAL COMMITMENTS: LEARNING FINANCIAL

PRINCIPLES

The way fintech and DeFi apps and games are designed, the goals they

include for their users, and the way their users digitally engage with them can

influence the way users understand financial notions and concepts such as credit,

financial commitments, debt, reward, labor, and even default. Therefore, when

dealing with platforms that arguably provide financial educational experience to

young users—as some fintech companies and traditional financial institutions

that enable children to open accounts argue they do—it is crucial to understand

that the way they design or offer their products and services will affect future

generations’ approaches to our financial system, its norms, and fiscal planning

in general. For instance, when children play a game in which they are unlikely

228

. Buy Instagram Likes: How To Buy Instagram Likes & Increase Your Exposure, ASSOCIATED PRESS

(Dec. 20, 2020), https://apnews.com/article/online-media-social-media-media-6d2f1438f3b6914498e11e0ad6

b06d68.

229

. Sapna Maheshwari, How Bots Are Inflating Instagram Egos, N.Y. TIMES (June 6, 2017),

https://www.nytimes.com/2017/06/06/business/media/instagram-bots.html.

230

. Shaohai Jiang & Annabel Ngien, The Effects of Instagram Use, Social Comparison, and Self-Esteem

on Social Anxiety: A Survey Study in Singapore, SOC. MEDIA & SOC’Y, May 6, 2020, at 1, https://journals

.sagepub.com/doi/pdf/10.1177/2056305120912488.

231

. See, e.g., Jillian D’Onfro, Venmo’s ‘Secret Sauce’ Keeps Users Checking the App Even When They’re

Not Making Payments, BUS. INSIDER (Dec. 9, 2015, 11:03 AM), https://www.businessinsider.com/venmo-

social-feed-is-its-secret-sauce-2015-12 (“[People] love it because it lets them scope the transactions of everyone

in their social circle. The app lets people send money back-and-forth, and unless they set a transaction as

‘private,’ it will appear on the app’s social feed, sans dollar-amount, for anyone connected to them to see.”).

232

. Elizabeth Bernstein, How To Spot Teenage Depression, WALL ST. J., https://www.wsj.com/articles/is-

your-teen-depressed-or-just-moody-1520266550?mod=article_inline (Mar. 5, 2018, 4:43 PM).

233

. Brianna Abbott, Youth Suicide Rate Increased 56% in Decade, CDC Says, WALL ST. J.,

https://www.wsj.com/articles/youth-suicide-rate-rises-56-in-decade-cdc-says-11571284861 (Oct. 17, 2019,

10:10 AM).

234

. Buss, supra note 11, at 267.

386 HASTINGS LAW JOURNAL [Vol. 74:349

to be able to advance beyond a certain level no matter how hard they try unless

someone buys that ability for them, there may be a life lesson there.

Unfortunately, this is often the case in digital games, which have default settings

that make it impossible to advance without making some microtransaction:

235

business transactions that involve “a very small amount of money, typically

under about $5.00” and enable players to purchase customized content,

accessories, or other game advantages.

236

Another example is Kwedit, which sounds like how a young child would

pronounce the word “credit,” a platform that became famous after the 2008

financial crisis for being one of the first to use the “buy now, pay later” (BNPL)

business model.

237

Under the Kwedit Promise System, users promised to pay

later for digital goods they would immediately receive, and those who could not

pay were nudged by the “Pass the Duck” feature to forward the commitment to

someone else, such as a parent or a more financially-sound relative.

238

BNPL—

a short-term financing option in which users agree to pay for their purchased

items or services in installments after a certain down payment—has since

continued to gain popularity,

239

but it has also raised concerns among

regulators.

240

For example, in February 2021, the British government announced

that BNPL would be regulated by the Financial Conduct Authority, determining

that there is “a significant risk” of harm to consumers.

241

Likewise, in late 2021,

the CFPB asked split-payment services for more information on their installment

plans, expressing concerns over consumers.

242

And even the U.S. credit rating

bureau, Equifax, announced it would start recording BNPL plans that allow

235

. European consumer groups recently focused on in-game microtransactions and their manipulative,

addictive nature, which especially hurts children. Tom Gerken, Report Blasts “Manipulative” Video Game Loot

Boxes, BBC NEWS (May 31, 2022), https://www.bbc.com/news/technology-61594815.

236

. Rebecca E. McDonough, Loot Boxes: “It’s a Trap!”, 46 N. KY. L. REV. 62, 62 (2019).

237

. This business model is based on a no-interest, post-purchase monthly installment concept. Why ‘Buy

Now, Pay Later’ Is Popping Up Everywhere, WALL ST. J.: THE J. (Sept. 21, 2021, 4:25 PM), https://www.wsj

.com/podcasts/the-journal/why-buy-now-pay-later-is-popping-up-everywhere/baa2dae5-5bde-4f63-99bc-

2760e70de1ff?mod=article_inline (describing the growing number of retailers that are offering customers the

ability to shop for a product and pay for it later in installments).

238

. Daniel Wolfe, Name Isn’t All That’s Changed at the Former Kwedit, AM. BANKER (Sept. 24, 2010,

5:59 PM), https://www.americanbanker.com/news/name-isnt-all-thats-changed-at-the-former-kwedit.

239

. Robin Saks Frankel, What Is Buy Now, Pay Later?, FORBES, https://www.forbes.com/advisor/credit-

cards/buy-now-pay-later/ (June 15, 2022, 9:11 AM).

240

. Alix Fraser, Everything Retailers Need To Know About Buy Now, Pay Later, LIGHTSPEED (Oct. 6,

2021), https://www.lightspeedhq.com/blog/retailers-buy-now-pay-later/; Buy Now Pay Later Firms in Saudi

Arabia Must Get a Permit: SAMA, ARAB NEWS, https://www.arabnews.com/node/1941831/business-economy

(Oct. 6, 2021).

241

. Rupert Jones, Consultation Launched on Regulating UK’s Buy Now, Pay Later Credit Industry, THE

GUARDIAN (Oct. 21, 2021, 11:45 AM), https://www.theguardian.com/money/2021/oct/21/consultation-

launched-on-regulating-uks-buy-now-pay-later-credit-industry.

242

. Telis Demos, Buy Now, Pay Later Is Just One Piece of the Fintech Puzzle, WALL ST. J. (Dec. 20, 2021,

12:44 PM), https://www.wsj.com/articles/buy-now-pay-later-is-just-one-piece-of-the-fintech-puzzle-116400

22287?reflink=desktopwebshare_linkedin.

February 2023] FINANCIAL INCLUSION GONE WRONG 387

shoppers to make multiple payments, as such plans make it more difficult to

assess consumers’ real financial abilities and risk.

243

The BNPL-related concerns, however, were not the only problem with

Kwedit’s business model. The promises that children made to Kwedit very

quickly became unenforceable, and there were no real consequences for users

who did not pay, just incentives. Therefore, apps like Kwedit in essence helped

instill in children the understanding that it is okay to buy things you cannot

afford, and that even if you cannot repay your debt, there is no harm done.

Indeed, Kwedit’s model made children learn, firsthand, the horrible financial

lesson that it is okay to gain more and more credit but not honor the financial

commitments made.

244

In recent decades, a dominant theory in the world of education has been

teaching children the importance of consequences in a clear, logical, kind, and

safe way.

245

Following this approach, describing predictable expectations and

consequences in a consistent way can help children learn and better predict and

prepare for possible future outcomes. Moreover, establishing clear, logical rules

helps children learn the benefits of positive behavior, because consequences are

the positive or negative results of behavior.

246

Teaching children that their

behaviors have consequences is not always easy, and certainly if the goal is to

do so in a safe and educational environment. Yet in the financial context,

teaching children the importance of being financially responsible, trustworthy,

and rational is something that may be achieved by showcasing various potential

consequences. However, business models like Kwedit’s, or other overly

gamified,

247

psychologically manipulative, risk-inducing, or debt-soliciting

243

. AnnaMaria Andriotis, Equifax To Add More ‘Buy Now, Pay Later’ Plans to Credit Reports, WALL ST.

J. (Dec. 19, 2021, 7:00 AM), https://www.wsj.com/articles/equifax-to-add-more-buy-now-pay-later-plans-to-

credit-reports-11639915203?reflink=desktopwebshare (“[Such] plans often don’t show up on credit reports,

creating a blind spot for lenders that use the information on the reports to gauge an applicant’s ability to repay.”).

244

. Wolfe, supra note 238.

245

. In modern psychology, which follows the Adlerian school of thought, it is believed that natural

consequences constitute the direct result of the child’s actions. See, e.g., THOR JOHANSEN, RELIGION AND

SPIRITUALITY IN PSYCHOTHERAPY: AN INDIVIDUAL PSYCHOLOGY PERSPECTIVE 194–95 (2010). Therefore, to

educate or teach children right behavior from wrong, educators and caregivers should explain to children what

the natural consequences of their actions are to teach them to do better and to be accountable for their decisions

and actions. See id.

246

. Id.

247

. See, e.g., Ann Carrns, Apps Try Putting Financial Literacy at Kids’ Fingertips, N.Y. TIMES (Aug. 27,

2021), https://www.nytimes.com/2021/08/27/business/kids-financial-literacy-apps.html (describing how while

fintech apps for children can be valuable resources to help parents teach children about money, they “may

encourage risky behaviors,” according to some experts); Lu-Hai Liang, Does E-Money Make You Spend More?,

BBC (Dec. 5, 2019), https://www.bbc.com/future/article/20191204-does-e-money-make-you-spend-more

(“Spending on a credit card clearly has effects on how people spend, which numerous studies have borne out. . . .

But what about using e-wallets? . . . If you lose feedback, then yes you’ll be spending more. . . . [Also,] it could

be hypothesized that the flinch moment could be missing when paying with a smartphone.”); Tracy Markle &

Brett Kennedy, In-Game Purchases: How Video Games Turn Players into Payers, DIGIT. MEDIA TREATMENT,

https://digitalmediatreatment.com/in-game-purchases/ (Mar. 29, 2021) (“The news is full of stories about kids

spending a small fortune on in-game purchases with their parents’ credit cards. . . . And while children, teenagers

and problem gamblers are most vulnerable, anyone who plays video games is susceptible.”).

388 HASTINGS LAW JOURNAL [Vol. 74:349

models in which children understand the potential consequences only when it is

too late

248

are not the way to go.

E. THE PARENTS’ PERSPECTIVE

Since it is widely believed that parental behavior impacts children’s

development, mainstream parents face pressure, informed by social trends and

legal norms, to create the optimal conditions for their children’s development.

249

This belief, along with technological innovation, has contributed to the rise of

the intensive parenting model in which an increasing number of parents expect

and want full access to information about their children, viewing it as necessary

to involve themselves in all aspects of their children’s lives.

250

This includes

accessing information about what their children are up to online, academically,

and socially,

251

as well as staying on top of their children’s digital financial

activity, something parents might not be aware of if they are already struggling

to keep up with supervising their children’s online activities. Enabling children

to use digital financial apps will require much more effort, because doing so

requires parents to be on the lookout for a wide variety of things. For example,

children can be overly generous with gifting their friends, borrow excessive

amounts of money from friends, be taken advantage of, and attempt to appear

richer than they are to “keep up with the Joneses.”

252

These issues, especially

along with cyberbullying, are real problems with serious negative effects on

victims, parents, communities, and schools, particularly as educators across the

board have failed to find suitable solutions.

253

Accordingly, as of now,

regulators’ efforts do not in fact include negative consequences, such as

imposing criminal anti-cyberbullying sanctions

254

aimed at both punishing and

deterring cyberbullying. Instead, increased internet safety educational efforts

primarily “address cyberbullying positively, by empowering educators with the

necessary tools to inform students and parents about how to use ever-changing

technology wisely and safely.”

255

But staying on top of their children’s online

financial decision-making is difficult even for the most tech-savvy parents due

248

. Maggie Fitzgerald, Robinhood Sued by Family of 20-Year-Old Trader Who Killed Himself After

Believing He Racked Up Huge Losses, CNBC, https://www.cnbc.com/2021/02/08/robinhood-sued-by-family-

of-alex-kearns-20-year-old-trader-who-killed-himself-.html (Feb. 8, 2021, 9:26 PM).

249

. Kim H. Pearson, Chemical Kids, 24 TEX. J. WOMEN, GENDER & L. 67, 70 (2014).

250

. See Gaia Bernstein & Zvi Triger, Over-Parenting, 44 U.C. DAVIS L. REV. 1221, 1225 (2011) (defining

intensive parenting as “actively cultivat[ing] [the] child, acquir[ing] sophisticated knowledge of best child

rearing practices, and utiliz[ing] this knowledge to closely monitor the child’s development and daily activities”).

251

. Deborah Ahrens, Schools, Cyberbullies, and the Surveillance State, 49 AM. CRIM. L. REV. 1669, 1715–

16 (2012).

252

. See Tim Devaney, Nearly 40% of Millennials Overspend To Keep Up with Friends, CREDIT KARMA

(Apr. 5, 2018), https://www.creditkarma.com/insights/i/fomo-spending-affects-one-in-four-millennials.

253

. Jamie L. Williams, Note, Teens, Sexts, & Cyberspace: The Constitutional Implications of Current

Sexting & Cyberbullying Laws, 20 WM. & MARY BILL RTS. J. 1017, 1037 (2012).

254

. Jessica P. Meredith, Note, Combating Cyberbullying: Emphasizing Education over Criminalization,

63 FED. COMMC’NS L.J. 311, 313 (2010).

255

. Id.

February 2023] FINANCIAL INCLUSION GONE WRONG 389

to rapid technological innovation. For instance, although tech savvy parents may

know how to use voice-activated assistants, few understand their true power,

which children are quick to unlock.

256

Even so, 36% of parents of children

eleven or younger let their children use a voice-activated assistant, like Apple’s

Siri or Amazon’s Alexa.

257

But how many know what Alexa “skills” their

children have inadvertently enabled? When children interact with sophisticated

AI technology, they test boundaries by purposefully saying the “wrong” thing.

In many instances, their seemingly funny comments can enable age-

inappropriate features or “skills” that third parties have enabled. Not only can

children receive age-inappropriate results, but they can also inadvertently waive

privacy rights, allowing third parties to enter their homes and use their data

without parental knowledge, as a study of Amazon Alexa skills recently

revealed.

258

Before thinking that they have found an easy way to provide their children

with early digital-investing and securities-trading experience, parents must think

carefully about whether they have the time and energy to ensure that the new

technology does not have the opposite effect of increasing gaming addiction and

irresponsible monetary actions. Moreover, unlike many things that are

accessible to children, these new technologies do not yet have regulatory

guardrails to ensure safety. That burden rests solely upon parents.

259

IV. REGULATION TIME: WHO’S THE BOSS?

In recent years, regulators all over the world have attempted to address

some of the concerns discussed in this Article. Among the jurisdictions that have

focused on these issues is China, which placed strict limits on how long minors

can play online video games.

260

Somewhat relatedly, in September 2021, the

People’s Bank of China, China’s central bank, banned all cryptocurrency

256

. See Michael S. Rosenwald, How Millions of Kids Are Being Shaped by Know-It-All Voice Assistants,

WASH. POST (Mar. 2, 2017), https://www.washingtonpost.com/local/how-millions-of-kids-are-being-shaped-

by-know-it-all-voice-assistants/2017/03/01/c0a644c4-ef1c-11e6-b4ff-ac2cf509efe5_story.html.

257

. Brooke Auxier, Monica Anderson, Andrew Perrin & Erica Turner, Parenting Children in the Age of

Screens, PEW RSCH. CTR. (July 28, 2020), https://www.pewresearch.org/internet/2020/07/28/parenting-children

-in-the-age-of-screens/.

258

. Davey Winder, Security Researchers Probed 90,194 Amazon Alexa Skills—the Results Were Shocking,

FORBES (Mar. 7, 2021, 7:14 AM), https://www.forbes.com/sites/daveywinder/2021/03/07/security-researchers-

probed-90194-amazon-alexa-skills-the-results-were-shocking/?sh=71c102162800.

259

. Naomi Cahn, CRISPR Parents and Informed Consent, 23 SMU SCI. & TECH. L. REV. 3, 13 (2020)

(explaining how because of children’s lack of capacity, “parents engage in decisionmaking for their children,

[and] the law provides great deference, intervening only at the point of abuse or neglect”).

260

. Chris Buckley, China Tightens Limits for Young Online Gamers and Bans School Night Play, N.Y.

TIMES (Aug. 30, 2021), https://www.nytimes.com/2021/08/30/business/media/china-online-games.html#:~:text

=China’s%20strict%20limits%20on%20how,under%20government%20rules%20issued%20Monday

(“Chinese children and teenagers are barred from online gaming on school days, and limited to one hour a day

on weekend and holiday evenings, under government rules . . . .”).

390 HASTINGS LAW JOURNAL [Vol. 74:349

transactions.

261

The Bank cited cryptocurrencies’ impact on the environment,

facilitation of financial crime, and highly volatile and speculative characteristics

as posing a growing risk to China’s financial system.

262

Similar to China, the

South Korean government has expressed concerns about risky games that are de

facto gambling, referencing article 32 of the country’s Gaming Industry

Promotion Act, which notably forbids the conversion of game currency into

cash.

263

The Korean Game Rating and Administration Committee has already

prevented the distribution of P2E games Infinite Breakthrough and Three

Kingdoms Reverse from app stores by withholding their rating classification.

264

South Korea also has a form of soft web censorship on what the government

considers illegal or subversive materials.

265

Due in part to article 28 of the

Gaming Industry Promotion Act, Korean regulators issued an official request to

Apple and Google asking them to prevent any new registration of P2E games on

their app stores.

266

The Gaming Industry Promotion Act outlaws gambling, free

gifts, and speculative conduct, and presents difficulties for the developing

GameFi, gaming, and loot-box industry players.

267

Finally, P2E may also be

barred in Japan, as the majority of in-game activities could be regarded as

gambling, and especially since the mechanics of some games can be interpreted

as prohibited under the Improper Premiums and Misleading Representations Act

of Japan’s Consumer Affairs Agency.

268

Taking a different approach from Asian regulators, lawmakers in the

United Kingdom have enacted the Age Appropriate Design Code, which

establishes guidelines for digital services using children’s data.

269

The law

resulted in major innovations for child safety, including, for example, forcing

YouTube to turn off its autoplay function, and both TikTok and Instagram to

prevent unknown adults from direct messaging minors.

270

In the United States, lawmakers have focused thus far mainly on advancing

legal initiatives that relate to the harmful impact that social media has on

261

. Ryan Browne, China’s Central Bank Says All Cryptocurrency-Related Activities Are Illegal, Vows

Harsh Crackdown, CNBC, https://www.cnbc.com/2021/09/24/china-central-bank-vows-harsh-crackdown-on-

cryptocurrency-industry.html (Sept. 24, 2021, 10:15 AM).

262

. Francis Shin, What’s Behind China’s Cryptocurrency Ban?, WORLD ECON. F. (Jan. 31, 2022),

https://www.weforum.org/agenda/2022/01/what-s-behind-china-s-cryptocurrency-ban/ (explaining that another

potential motivation behind the ban could be an attempt to combat capital flight from China).

263

. Reynolds, supra note 104.

264

. Id.

265

. Id.

266

. Id.

267

. Id.

268

. Id.

269

. See Introduction to the Age Appropriate Design Code, INFO. COMM’R’S OFF., https://ico.org.uk/for-

organisations/guide-to-data-protection/ico-codes-of-practice/age-appropriate-design-code/ (last visited Jan. 28,

2023).

270

. Madison Hirneisen, California Bill Would Require Greater Online Protections for Minors, CTR.

SQUARE (Apr. 20, 2022), https://www.thecentersquare.com/california/california-bill-would-require-greater-

online-protections-for-minors/article_79fec192-c0b1-11ec-91da-af572ae2c059.html.

February 2023] FINANCIAL INCLUSION GONE WRONG 391

children, but have not addressed the financial aspects of games and apps offered

to children.

271

These initiatives have included four main courses of action. First,

in his 2022 State of the Union Address, President Biden threatened Big Tech

companies over their “national experiment” on children, and vowed to hold

social media platforms accountable for their harms.

272

Second, federal

lawmakers have probed senior tech executives about child safety, “airing

frustrations and attempting to extract various commitments . . . to make the

platform[s] . . . safer space[s] for [their] youngest users.”

273

Third, state

attorneys general have been investigating social media and Big Tech companies

over how their designs operate and promote certain features that can potentially

harm children.

274

Lastly, some states have started advancing bills that may minimize some

of the harmful impacts that social media digital platforms have on children. For

example, California lawmakers introduced the bipartisan legislation Assembly

Bill 2273, the California Age-Appropriate Design Code Act, which contains

provisions protecting children’s data and requiring social media companies to

design their products with the best interests of child users in mind.

275

The law

was intended to be enforced by the California Privacy Protection Agency and to

establish the California Children’s Data Protection Taskforce.

276

Likewise,

271

. See, e.g., Sarah Beth Guevara, Senators Introduce Bill To Limit Harmful Effects of Social Media on

Young People, ABC NEWS (Feb. 17, 2022, 5:54 AM), https://abcnews.go.com/Politics/senators-introduce-bill-

limit-harmful-effects-social-media/story?id=82932781. But aside from social media’s impact on children’s

emotional state, federal lawmakers have largely ignored issues that relate to children’s use of digital platforms,

games, and apps. For example, in contrast to the regulated movie industry, digital apps’ content age rating is

completely unregulated. Existing ratings rely purely on the subjective discretion of app-developers, without any

evidence-based guidelines or external, objective review. See, e.g., Dave Davies, Users Beware: Apps Are Using

a Loophole in Privacy Law To Track Kids’ Phones, NPR (June 16, 2022, 12:38 PM), https://www.npr.org

/transcripts/1105212701.

272

. Shirin Ghaffary, Biden Threatens Big Tech over Its “National Experiment” on Children, VOX (Mar. 1,

2022, 10:43 PM), https://www.vox.com/recode/2022/3/1/22957507/biden-state-of-the-union-social-media-

mental-health-children-accountability-frances-haugen (“To make his point, [President Biden] referred to a

special guest in the audience, former Facebook employee Frances Haugen, who shared internal company

documents with the press and Congress last fall that showed Facebook had publicly downplayed its own research

that found a connection between its products and mental health issues in some teenagers.”).

273

. See, e.g., Vanessa Romo, 4 Takeaways from Senators’ Grilling of Instagram’s CEO About Kids and

Safety, NPR (Dec. 8, 2021, 10:13 PM), https://www.npr.org/2021/12/08/1062576576/instagrams-ceo-adam-

mosseri-hears-senators-brush-aside-his-promises-to-self-poli.

274

. See, e.g., John D. McKinnon, TikTok Faces Scrutiny in State Attorneys General Probe of Online Harms

to Children, WALL ST. J., https://www.wsj.com/articles/tiktok-faces-scrutiny-in-state-attorneys-general-probe-

of-online-harms-to-children-11646251698 (Mar. 2, 2022, 5:17 PM) (describing an investigation into TikTok

seeking information about whether and how the digital platform contributes to online harms to children, and

indicating that this move was an extension of an investigation unveiled by the same group of eight state attorneys

general into Meta’s Instagram).

275

. Andrew Sheeler, California Gov. Gavin Newsom Signs Law Intended To Protect Children on Social

Media, THE SACRAMENTO BEE, https://www.sacbee.com/news/politics-government/capitol-alert/article265870

746.html#storylink=cpy (Sept. 16, 2022, 12:06 PM).

276

. California Lawmakers Propose Children’s Privacy Bill, INT’L ASS’N OF PRIV. PROS. (Feb. 17, 2022),

https://iapp.org/news/a/california-lawmakers-propose-childrens-privacy-bill/. Another source explains:

392 HASTINGS LAW JOURNAL [Vol. 74:349

California lawmakers introduced the bipartisan, first-in-the-nation legislation

Assembly Bill 2408, the Social Media Platform Duty to Children Act, which

sought to discourage social media companies and tech giants, via financial

accountability, from manipulating their services and products to be addictive and

harmful to children.

277

In particular, the new bill was meant to open up social

media platforms like Meta, TikTok, and Snap to lawsuits from parents who

believe their children have become addicted to social media apps.

278

Moreover,

the bill sought to hold social media companies accountable even if they did not

intentionally make their platforms addictive to children, and companies could

still be on the hook for civil penalties if they “knew or should have known” that

their services and products would be addictive and harmful to children.

279

However, Assembly Bill 2408 was “targeted for defeat by the social media

industry, including Meta,” and eventually “[l]obbyists were successful and the

bill died a quiet death on the Senate Appropriations Committee suspense file.”

280

Additionally, Assembly Bill 2408 was not meant to intrude upon § 230 of the

Federal Communications Decency Act,

281

which protects digital platforms from

State Assembly members Buffy Wicks, a Democrat, and Jordan Cunningham, a Republican . . .

proposed the California Age-Appropriate Design Code Act, a bill modeled on the U.K.’s Age

Appropriate Design Code, also known as the Children’s Code. If enacted, owners of web products

would be required to limit the collection of California children’s data, better protect them from other

users, curtail addictive interfaces, and simplify convoluted privacy settings and agreements. The bill

would also ban so-called nudging techniques designed to subtly get children to allow data sharing,

as well as collecting data including location information for purposes outside of the product or service

the child is using.

Katie Deighton, Silicon Valley Faces Pressure To Redesign Children’s Online Experience, WALL ST. J. (Feb.

18, 2022, 6:43 PM), https://www.wsj.com/articles/silicon-valley-faces-pressure-to-redesign-childrens-online-

experience-11645227819.

277

. Leo Stallworth, CA Parents Could Sue Social Media Giants If They Feel Their Kids Have Become

Addicted Under New Bill, ABC7 NEWS (Mar. 25, 2022), https://abc7news.com/social-media-bill-california-

assembly-no-2408-platform-duty-to-children-act/11679321/#:~:text=SACRAMENTO%20--%20California%

20lawmakers%20have%20proposed%20a%20bill,if%20they%20prove%20to%20be%20harmful%20to%20ch

ildren; see also A.B. 2408, 2021-2022 Reg. Sess. (Cal. 2022); Amendments to Assembly Bill No. 2408, CHILD.’S

ADVOC. INST. (Mar. 10, 2022, 4:36 PM), https://www.sandiego.edu/cai/documents/AB2408%20amends.pdf.

278

. See, e.g., Christian Hetrick, California Bill Would Let Parents Sue TikTok, Snap for Kids’ Social Media

Addictions, DOT.LA (Mar. 17, 2022), https://dot.la/social-media-addiction-california-bill-2656981477.html.

279

. Id. This source explains:

The bipartisan California bill comes from Assembly members Jordan Cunningham, a Republican

from San Luis Obispo, and Buffy Wicks, a Democrat who represents Oakland. In introducing the

bill, the lawmakers singled out Meta, the social media behemoth formerly known as Facebook. They

noted how leaked data from the company showed that teen girls, in particular, reported negative

experiences after using Instagram—including some who said it made their suicidal thoughts or eating

disorders worse. ‘It’s time we treat the dangers of youth social media addiction with the level of

seriousness it warrants,’ Cunningham said in a statement.

Id.

280

. See Sheeler, supra note 275.

281

. Section 230 of the Communications Act of 1934, enacted as part of the Communications Decency Act

of 1996, states that “[n]o provider or user of an interactive computer service shall be treated as the publisher or

speaker of any information provided by another information content provider.” 47 U.S.C. § 230(c)(1).

February 2023] FINANCIAL INCLUSION GONE WRONG 393

liability for the content that others post on their platforms; according to those

initiating the legislation, the California bill had nothing to do with content.

282

Not everyone agreed with § 230’s approach, and in March 2022, Supreme

Court Justice Clarence Thomas opined that Congress should revisit the scope of

immunity afforded to online platforms under § 230.

283

Similarly, in 2020,

lawmakers proposed legislation in Congress, the EARN IT Act, aiming to amend

§ 230.

284

On March 5, 2020, the National Center for Missing and Exploited

Children, among other nonprofits, endorsed the legislation, writing that “it

provides ESPs [electronic service providers] with a roadmap to adopt specific,

consistent best practices developed by industry and subject matter experts to

prevent, reduce, and respond to the online sexual exploitation of children.”

285

Lastly, several bipartisan bills have been proposed in Congress seeking to

initiate the kinds of reforms President Biden mentioned in his Address, including

an update to the Children and Teens’ Online Privacy Protection Act and the Kids

Online Safety Act.

286

But making sure that children are protected from online social media

manipulation is only one piece of the puzzle when searching for policies more

conducive to good consumer and investor protection outcomes that would guide

lawmakers in regulating the digital financial services and products that are

offered to children. Furthermore, the different challenges associated with these

innovative new services and products, as discussed above, may mean that we

need to adopt a new approach for regulating tech, DeFi, and digital platform

companies—namely, the creation of a new digital platform agency, similar to

the CFPB, that would better protect consumers, as scholars Tom Wheeler, Phil

Verveer, and Gene Kimmelman have recently suggested.

287

Indeed, addressing

such challenges requires multiple government agencies to coordinate regulating

cutting-edge issues that fall under the jurisdiction of various regulatory bodies,

282

. Lauren Berg, Calif. Bill Could Hook Tech Cos. for Social Media Addiction, LAW360 (Mar. 16, 2022),

https://www.law360.com/personal-injury-medical-malpractice/articles/1474359/calif-bill-could-hook-tech-cos

-for-social-media-addiction?copied=1.

283

. P.J. D’Annunzio, Thomas Targets Immunity Issue as Court Skips Facebook Row, LAW360 (Mar. 7,

2022), https://www.law360.com/personal-injury-medical-malpractice/articles/1474359/calif-bill-could-hook-

tech-cos-for-social-media-addiction?copied=1.

284

. EARN IT Act, S. 3398, 116th Cong. (2020).

285

. John F. Clark, EARN IT Act 2020: NCMEC Supports New Legislation To Protect Children, NAT’L

CTR. FOR MISSING & EXPLOITED CHILD. (Mar. 5, 2020), https://www.missingkids.org/blog/2020/earn-it-act-

2020; Chris Mills Rodrigo, Senate Panel Advances Controversial Bill Aimed at Protecting Children Online, THE

HILL (Feb. 10, 2022, 11:38 AM), https://thehill.com/policy/technology/593693-senate-panel-advances-

controversial-bill-aimed-at-protecting-children/?rl=1.

286

. See Ghaffary, supra note 272; Andrew Ross Sorkin, Sarah Kessler, Stephen Gandel, Michael J. de la

Merced, Lauren Hirsch & Ephrat Livni, Child Safety Is the New Tech Battleground, N.Y. TIMES (Feb. 17, 2022),

https://www.nytimes.com/2022/02/17/business/dealbook/children-online-safety-bill.html.

287

. See generally TOM WHEELER, PHIL VERVEER & GENE KIMMELMAN, NEW DIGITAL REALITIES; NEW

OVERSIGHT SOLUTIONS IN THE U.S. (2020), https://shorensteincenter.org/wp-content/uploads/2020/08/New-

Digital-Realities_August-2020.pdf (addressing the challenge of government oversight for digital platform

companies and suggesting the creation of a brand new federal agency designed to deal with digital issues rather

than industrial ones).

394 HASTINGS LAW JOURNAL [Vol. 74:349

which live by old statutes that do not reflect digital realities and operate under

old procedures that may no longer be relevant.

288

The kinds of issues a new regulator should address include, but are not

limited to, the following five. The first is consumer protection issues that relate

to deceptive and unfair advertising of fintech and DeFi products and services.

Currently, in the United States, the FTC serves as the watchdog for protecting

consumers and promoting fair market competition and issues guidelines

regarding compliance with laws prohibiting deceptive and unfair practices,

which cover advertising.

289

The FTC details which practices qualify as deceptive

or unfair and sets standards for ensuring compliance.

290

However, the FTC has

not updated its advertising guidelines to address new digital platforms used for

advertising, like social media, since 2013, when it clarified that the same

consumer protection laws governing commercial activities also apply online and

added new regulations applicable to social media advertising.

291

Then, in 2020, the FTC briefly addressed advertising in the massively

growing digital gaming industry, issuing a report titled “Staff Perspective on Its

Workshop, Inside the Game: Unlocking the Consumer Issues Surrounding Loot

288

. Id. at 6.

289

. See What We Do, FED. TRADE COMM’N, https://www.ftc.gov/about-ftc/what-we-do [https://web

.archive.org/web/20211129203926/https://www.ftc.gov/about-ftc/what-we-do] (“The FTC is a bipartisan

federal agency with a unique dual mission to protect consumers and promote competition. For one hundred

years, our collegial and consensus-driven agency has championed the interests of American consumers. As we

begin our second century, the FTC is dedicated to advancing consumer interests while encouraging innovation

and competition in our dynamic economy.”); see also Leah W. Feinman, Note, Celebrity Endorsements in Non-

Traditional Advertising: How the FTC Regulations Fail To Keep Up with the Kardashians, 22 FORDHAM

INTELL. PROP. MEDIA & ENT. L.J. 97, 107 (2011) (describing how the history of the FTC’s regulation of product

endorsements originated with the tobacco industry).

290

. See, e.g., Guides Concerning Use of Endorsements and Testimonials in Advertising, 16 C.F.R.

§ 255.0(a) (2022) (“The Guides in this part represent administrative interpretations of laws enforced by the

Federal Trade Commission for the guidance of the public in conducting its affairs in conformity with legal

requirements. Specifically, the Guides address the application of Section 5 of the FTC Act (15 U.S.C. 45) to the

use of endorsements and testimonials in advertising. The Guides provide the basis for voluntary compliance with

the law by advertisers and endorsers. Practices inconsistent with these Guides may result in corrective action by

the Commission under Section 5 if, after investigation, the Commission has reason to believe that the practices

fall within the scope of conduct declared unlawful by the statute. The Guides set forth the general principles that

the Commission will use in evaluating endorsements and testimonials, together with examples illustrating the

application of those principles. The Guides do not purport to cover every possible use of endorsements in

advertising. Whether a particular endorsement or testimonial is deceptive will depend on the specific factual

circumstances of the advertisement at issue.”).

291

. See FTC.COM DISCLOSURES: HOW TO MAKE EFFECTIVE DISCLOSURES IN DIGITAL ADVERTISING 2 n.5

(2013), https://www.ftc.gov/system/files/documents/plain-language/bus41-dot-com-disclosures-information-

about-online-advertising.pdf (citing 16 C.F.R. § 1.5 (2013)) (“Guides are ‘administrative interpretations of laws

administered by the Commission.’ Although guides do not have the force and effect of law, if a person or

company fails to comply with a guide, the Commission might bring an enforcement action alleging an unfair or

deceptive practice in violation of the FTC Act.”).

February 2023] FINANCIAL INCLUSION GONE WRONG 395

Boxes,”

292

which discussed a workshop the Agency held on this topic.

293

The

report examined the impact of loot boxes—randomized virtual items that players

can buy or earn through gameplay

294

—on video gamers, particularly children. It

also explored the financial impact paid loot boxes have on revenue streams and

consumers,

295

including the pay-to-progress and pay-to-win scenarios, where

child gamers find themselves in “grinding gameplay loops unless they buy loot

boxes.”

296

Especially because many of these children do not fully understand the

cost of loot-box transactions, they are susceptible to marketing tactics that lure

them to buy more loot boxes or engage in problematic digital media use.

297

Despite discussing these issues, the FTC stopped short of regulating them, citing

“commenters and panelists[’] divergent views on whether government

regulation is warranted,” and called for “industry self-regulatory initiatives” and

“ongoing research and consumer education.”

298

The FTC has yet to address

issues relating to DeFi, GameFi, and innovative business models such as P2E.

Not all governments, however, continue to ignore the issue. For example, in the

summer of 2022, Netherlands started moving toward passing a bill banning in-

game loot boxes because of the links between the loot boxes’ microtransactions

and gambling.

299

Second, a new potential regulator should address digital consumer financial

issues, including financial data. The CFPB uses enforcement, supervision,

regulation, and education tools to protect the interests of the American

consumer. Various state attorneys general and consumer protection agencies

support the Bureau’s efforts to protect consumers’ financial interests, serving as

force-multiplier partners throughout the country.

300

Moreover, in October 2021,

the Bureau issued section 1022(c)(4) orders requesting information from major

technology companies relating to payments services offered to consumers,

signaling the Bureau’s intent to position itself as the main regulator of major

fintech companies, and perhaps also to pursue a fair competition agenda, which

292

. Lesley Fair, Loot Boxes: What’s in Play?, FED. TRADE COMM’N (Aug. 14, 2020), https://www.ftc.gov

/business-guidance/blog/2020/08/loot-boxes-whats-play.

293

. Inside the Game: Unlocking the Consumer Issues Surrounding Loot Boxes, FED. TRADE COMM’N (Aug.

7, 2019, 10:00 AM), https://www.ftc.gov/news-events/events-calendar/inside-game-unlocking-consumer-issues

-surrounding-loot-boxes.

294

. Id. For more on the financial success of loot boxes, see Michael Baggs, Genshin Impact Earns $2

Billion After ‘Unheard Of’ Success in First Year, BBC (Sept. 30, 2021), https://www.bbc.com/news/newsbeat-

58707297.

295

. Fair, supra note 292.

296

. Id.

297

. Id.

298

. Id.

299

. Loot Boxes Likely To Be Banned in the Netherlands Due to Gambling Links, USA TODAY: FOR THE

WIN (July 4, 2022, 8:33 AM), https://ftw.usatoday.com/2022/07/loot-box-ban-the-netherlands.

300

. The Chopra Era at the Consumer Financial Protection Bureau — Four Months In, SIDLEY AUSTIN

LLP (Feb. 9, 2022), https://www.sidley.com/en/insights/newsupdates/2022/02/the-chopra-era-at-the-consumer-

financial-protection-bureau-four-months-in.

396 HASTINGS LAW JOURNAL [Vol. 74:349

historically has been the FTC and DOJ’s agenda.

301

Similarly, when dealing with

children, or any persons who invest, trade, and earn digital assets online, the

issue of managing and handling such persons’ financial data becomes important.

Consumers’ financial data implicates matters like data portability

302

and open

banking standards,

303

which the CFPB is working on creating regulation for,

interpreting section 1033 of the Dodd-Frank Act.

304

Third, a new potential regulator should address privacy issues. The United

States does not have a federal consumer data privacy law, let alone a data

security law. Several states have started enacting their own laws and regulations,

with California,

305

Virginia,

306

Colorado,

307

and Utah

308

being the first four

states to pass such comprehensive data privacy legislation.

Fourth, a new potential regulator should address gambling laws. Gambling

is legal under U.S. federal law, but there are significant restrictions pertaining to

interstate and online gambling,

309

and each state is free to regulate or prohibit

the practice within its borders.

310

As for children playing online games that in

some aspects border gambling and focus on investing, earning, spending, and

trading digital assets on addictive platforms, gambling laws might not

301

. CFPB Orders Tech Giants To Turn Over Information on Their Payment System Plans, CONSUMER FIN.

PROT. BUREAU (Oct. 21, 2021), https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-tech-giants-

to-turn-over-information-on-their-payment-system-plans/.

302

. Gabriel Nicholas, Interoperability and Portability in the Wild, ENGELBERG CTR. ON INNOV. L. & POL’Y

19 (Apr. 2021), https://www.law.nyu.edu/sites/default/files/interoperability_and_portability_in_the_wild_

202104.pdf.

303

. Nizan Geslevich Packin, Show Me the (Data About the) Money!, 2020 UTAH L. REV. 1277, 1288

(examining consumers’ ability to manage their financial data—an issue that has been unclear in the United States

for a long time—and exploring the roles of data aggregators, fintech companies, and consumers in managing

this data).

304

. 12 U.S.C. § 5301.

305

. CAL. CIV. CODE §§ 1798.100–.199.100 (West 2022).

306

. VA. CODE ANN. §§59.1-575 to -585 (2022).

307

. COLO. REV. STAT. §§ 6-1-1301 to -1313 (2022).

308

. UTAH CODE ANN. §§ 13-61-101 to -404 (LexisNexis 2022).

309

. The Wire Act of 1961 outlaws the use of wire communication to make interstate bets or wagers for

sports betting and was primarily motivated to help states suppress organized criminal gambling. The Act was

intended to cover the use of telegraph wires; however, the government has extended it to cover internet

communications, too. Following a Fifth Circuit holding in In re Master-Card International, Inc., 313 F.3d 257

(5th Cir. 2002), that the law only applies specifically to sports betting and contests, the Department of Justice

(DOJ), which had originally confirmed this approach in a 2011 memorandum, retracted this view in 2018,

announcing that the law applies to all online gambling. See Elizabeth A. Walsh, In Re Mastercard International,

Inc.: The Inapplicability of the Wire Act to Traditional Casino-Style Games, 20 J. MARSHALL J. COMPUT. &

INFO. L. 445, 446 (2002); Natasha Bach, Justice Department Says All Online Gambling Is Illegal, FORTUNE (Jan.

15, 2019, 2:02 AM), https://fortune.com/2019/01/15/online-gambling-illegal-doj/. This opinion was challenged

by the New Hampshire Lottery Commission in the U.S. District Court for the District of New Hampshire, which

granted summary judgment against the government, holding that the law is limited to sports gambling and setting

aside the DOJ’s opinion. N.H. Lottery Comm’n v. Barr, 386 F. Supp. 3d 132 (D.N.H. 2019), aff’d in part and

vacated in part sub nom., N.H. Lottery Comm’n v. Rosen, 986 F.3d 38 (1st Cir. 2021).

310

. See generally Jordan Hollander, The House Always Wins: The World Trade Organization, Online

Gambling, and State Sovereignty, 12 RUTGERS J.L. & PUB. POL’Y 179, 182 (2015) (describing how almost all

other states permit some type of gambling, except for Utah and Hawaii, which prohibit all forms of gambling in

the state, with Utah even amending its criminal code to include prohibitions on internet gambling).

February 2023] FINANCIAL INCLUSION GONE WRONG 397

necessarily prove helpful in terms of offering protections. Indeed, most digital

platforms—including fintech and DeFi apps and digital games with loot boxes—

generally are not identifiable as gambling under most U.S. law.

311

Fifth, a new potential regulator could also address digital investor

protection and issues relating to nontraditional semi-securities laws, which

include issues governed by the SEC and FINRA, if relevant and overlapping

with the four other mentioned contexts. While regulating traditional financial

institutions dealing with minors who enter into potential broker-dealer

relationships can be challenging, doing so in connection with service providers

that offer less traditional services is much more complicated. Indeed, the

complexity and lack of clarity associated with some of the newer and more

innovative fintech and DeFi products and services, and the challenges involved

in addressing, understanding, and regulating them, led the SEC and CFTC in

April 2022 to announce that they would coordinate regulating crypto exchanges

of both securities and non-securities.

312

Therefore, a new agency with the new DNA of staff and commissioners

who are graduates of the multi-faceted digital environment is needed to apply

new legislation to modern digital realities. Alternatively, since the CFPB’s scope

of authority overlaps the most with the issues described, designating it as the

primary regulator—and creating an interagency task force to coordinate

operations beyond its activities—might also prove effective. This is especially

true given President Biden’s March 2022 executive order on the regulation of

crypto products and services, which directed the CFPB and FTC to study how

to police crypto transactions for fraud and abuse.

313

The order did so in light of

both agencies’ unique powers to protect consumers against “unfair” and

“deceptive” acts and practices, and the CFPB’s additional authority to go after

“abusive” acts and practices.

314

The CFPB’s unique, broad enforcement

authority could therefore play a significant role in overseeing digital money and

crypto-related services and products in key areas like fraud protection and

consumer privacy.

315

CONCLUSION

In less than a century, the world has witnessed a dramatic shift from

scarcely granting children any rights to recognizing children’s rights in the

311

. Katlin D. Kiefer, From Video Gaming to Underage Gambling: Illinois’s Options in Addressing the

New Loot Box Monetization Model, 41 N. ILL. U. L. REV. 96, 105 (2021).

312

. See, e.g., Kevin Helms, SEC Chair Gensler Asks Staff To Collaborate with CFTC on Regulating Crypto

Exchanges, BITCOIN.COM (Apr. 5, 2022), https://news.bitcoin.com/sec-chair-gensler-asks-staff-to-collaborate-

with-cftc-on-regulating-crypto-exchanges/.

313

. Exec. Order No. 14,067, 87 Fed. Reg. 14143 (Mar. 9, 2022).

314

. Evan Weinberger, Crypto Order Pushes Biden’s Consumer Watchdogs to More Oversight,

BLOOMBERG (Mar. 17, 2022, 3:00 AM), https://news.bloomberglaw.com/tech-and-telecom-law/crypto-order-

pushes-bidens-consumer-watchdogs-to-more-oversight.

315

. Id.

398 HASTINGS LAW JOURNAL [Vol. 74:349

formal language of laws and the judicial system. These rights include

empowering children to enter into contractual transactions, including financial

ones, with the permission of their guardians. However, allowing children to toy

with digital financial games and apps to invest, earn, and trade traditional and

cryptoasset products is far from ideal or wise, and probably not developmentally

appropriate or desired. Will doing so lead to a generation of financially literate

young adults, or will it lead to gambling addicts in debt with little appreciation

for smart investing, on top of other potential harms resulting from using

addictive digital services? It seems that the key to gaining the most from these

newly accessible fintech possibilities, as with many other areas of the law related

to children’s development, is creating a careful, strict design of the products and

services children have the legal capacity to access. This not only comports with

children’s law and rights, but also complies with general investor and consumer

protection legal principles.