A banking app designed for teens and young adults has come under scrutiny in recent months after it was acquired by YouTube’s biggest star, leading to questions about the creator’s plans and shining a spotlight on youth-focused money apps and their offerings.
Sen. Elizabeth Warren, D-Mass., in March sent a letter to MrBeast, saying his company is “ill-prepared” to operate a financial service and demanding to know about his plans for the Step fintech app, which he purchased in February. Among her top concerns was whether the app would once again offer crypto trading to minors and potentially expand its products to include other risky investments.
MrBeast, whose real name is Jimmy Donaldson, is known for his videos that involve challenges and giveaways. His YouTube channel has more than 470 million subscribers, the most of any single channel on the platform. His Beast Industries business has expanded to offer snack brands and other products, but Step would be its first foray into financial services.
“Nobody taught me about investing, building credit or managing money when I was growing up,” Donaldson said in a post on X announcing the deal. “That’s exactly why we’re joining forces with Step! I want to give millions of young people the financial foundation I never had.”
But Warren questions whether Step will adequately protect young users and their money. She points to a crypto-related deal that Beast Industries announced just one month before the Step acquisition, and she also highlights Step’s history of offering cryptocurrency investments to those under 18.
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What Is the Step Banking App?
Step is one of a growing list of fintech apps targeted toward kids, teens and young adults. While the offerings vary slightly from app to app, most proclaim their mission to be at least partially educational, teaching young users financial literacy while providing services that give them hands-on experience in managing money.
And there are many beneficial features available in these apps. Step, which bills itself as the “all-in-one money app,” offers a savings account that pays 3% interest, cash back rewards and free financial education courses. It also offers a secured credit card, which pulls funds from the user’s deposit account to pay for purchases, allowing customers to build credit without the risk of going into debt. The app doesn’t charge monthly fees.
Like some other banking apps, Step also offers investing accounts for teens, which parents must set up and can monitor.
Step says it has grown to more than 7 million users since it was launched in 2020. Although it’s designed especially for younger users, many of its customers aren’t minors. About 90% of Step’s users are 18 or older, says a Beast Industries spokesperson.
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What Are the Concerns Over MrBeast’s Step App?
Concerns about the Step banking app’s future stem partly from its past.
In 2022, Step launched a crypto trading product available to minors with their parents’ consent, a rare feature among the typically more conservative kids’ money apps. Warren, a ranking member of the Senate Banking Committee, notes in her letter that Step peppered teens with promotional videos hyping digital assets, including one titled “How to Talk to Your Parents About Investing in Crypto.”
“Despite Step’s careful claims that crypto investing by minors was only with the permission of a parent or guardian, Step published resources encouraging kids to pressure their parents into crypto investments,” Warren wrote.
Step stopped offering crypto trading in 2024.
MrBeast’s acquisition of the app fueled fresh speculation that the crypto offering may make a comeback. In January, one month before the Step purchase, Beast Industries announced that it had received a $200 million investment from BitMine Immersion Technologies, an ethereum holding company. Beast Industries hasn’t announced any intentions to introduce digital assets to Step, and a spokesperson says the company is still evaluating its plans for the app.
“Our primary motivation behind this deal is to improve the financial future of the next generation,” says the spokesperson. “Now that we’ve completed the transaction and have ownership control, we’re examining all existing offerings and marketing approaches to ensure that Step’s future is developed thoughtfully and deliberately, meets our very high quality standards, and is in compliance with applicable laws and regulatory requirements.
“We appreciate Senator Warren’s outreach and look forward to engaging with her as we build the next phase of the Step financial platform.”
In her letter to Donaldson and Beast Industries CEO Jeff Housenbold, Warren requested a response by April 3. Her office didn’t respond to a U.S. News inquiry as to whether it had yet received answers from the company.
A big part of why Donaldson’s involvement in the Step app is garnering attention from lawmakers and observers is his outsized influence with a massive, younger audience. Because of that, the direction he chooses to go with the app is significant, says Michael Imerman, an assistant professor of teaching in the finance area at the Paul Merage School of Business at the University of California, Irvine, and co-author of the book “The Economics of FinTech.”
“Promoting an app that encourages financial literacy, saving, investing and budgeting to the youth I think is great,” says Imerman. “From that perspective, there’s a lot of good that Beast Industries could do with the Step app.”
However, he says offering and hyping crypto assets and other speculative, volatile investments to minors would be “incredibly dangerous.” In many cases, he points out, their parents don’t know much more about these products than the kids do.
“If you look at MrBeast’s following, he’s a personality that these kids look up to,” says Imerman. “If he’s going to promote this asset class to them, they’re going to take that very seriously, and to me that’s concerning.”
There is some debate as to whether allowing teens to invest small amounts in crypto could actually benefit them by letting them experience the harsh ups and downs of volatile investments. The thinking is that if the app’s goal is to prepare teens for their financial future, why shield them from something they’ll eventually be exposed to?
“Kids get excited about chasing trends, and crypto certainly is trendy,” says Chris Walsh, a Phoenix-based financial advisor at Capital Choice. “But it also exposes them to plenty of downside. Used the right way, it’s less of an investment tool and more of a teaching moment about what extremely volatile assets actually feel like in real time.”
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What to Look for in a Banking App for Your Teen
Banking apps can be useful tools for teaching teens about money. Here are some key features parents should look for when choosing the right teen banking app.
Adjustable Parental Controls
All teen-focused money apps should include parental controls, but the best ones allow parents to tighten or loosen the financial reins depending on a child’s age and maturity, says Stacy Mastrolia, an associate professor of accounting at Bucknell University’s Freeman College of Management and a personal finance coach.
For example, parents of younger teens may want the option to approve all transactions before they’re completed, whereas a daily spending report may be adequate when teens get older.
“For all teens, the ability for parents to remotely freeze spending for an account, set daily or transaction limits, or block certain types of merchants would be beneficial,” says Mastrolia.
Some Financial Independence
While adult oversight can prevent bad habits or problematic spending, the app should also provide teens — especially those nearing age 18 — with a sense of ownership and responsibility.
Mastrolia says features that track spending and allow users to set savings goals can help teens learn the basics of budgeting. Direct deposit, a debit card and access to peer-to-peer payment platforms give teens the freedom to put those budgeting tools to use.
In fact, some financial experts say these apps can provide an opportunity for teens to learn from their mistakes early on, before financial losses are large enough to have a major impact.
“I think parents need to let kids skin their knees financially,” says Walsh. “Most parents aren’t putting serious money into these accounts anyway, just enough for their teens to learn how to manage it. Some freedom to mess up is the whole point. An app that locks everything down so tight your teenager can’t make a mistake isn’t really teaching anything.”
He says watching the swings of a stock investment or even a digital asset could be educational and pay off down the road.
Financial Literacy Tools
Any banking app for teens should have strong educational content that complements the spending and savings components it provides. Look for an app that offers free courses, interactive quizzes or short videos on a wide range of financial basics. Imerman says this is an area where many fintech apps already shine, and they can play a crucial role in filling the gaps he sees in financial literacy.
“I think this is a really important conversation that as a society we need to have, and fintech is part of the solution,” says Imerman. “Fintech apps that do promote financial literacy and financial education, I think that’s key.”
Avoid Over-Gamification
This can be a delicate balance. Money apps need to be fun and engaging enough to motivate teens to build their financial knowledge. However, excessive reliance on points, badges and rewards systems that don’t directly relate to real-world financial concepts can distract from the core goal of teaching financial discipline.
Teens who become too engaged in an overly gamified app can be more vulnerable if that app starts offering riskier products, experts say.
Avoid Apps That Reward Spending
Yes, many of us strategically pile up credit card points or happily take advantage of cash back rewards.
But the primary function of a teen’s first banking account should be to teach them the value of saving and budgeting. Apps that reward spending often undermine this goal by encouraging unnecessary purchases. Look for apps that reward saving or smart financial habits instead.
“If parents want to teach their teens about investing, they should open an investment account and spend time, shoulder-to-shoulder, explaining investing, including its risks and rewards, to their teens,” says Mastrolia.
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MrBeast Now Owns This Popular Kids’ Money App ? Should You Be Concerned? originally appeared on usnews.com
