In a significant legal win for Australia’s crypto and fintech industry, the Federal Court has overturned a previous ruling that required digital finance firm Block Earner to obtain a financial services license for its discontinued fixed-yield crypto product.
The latest decision, handed down by Justices David O’Callaghan, Wendy Abraham, and Catherine Button, concluded that Block Earner’s crypto-linked offering does not meet the legal definitions of a financial product, a derivative, or a managed investment scheme under the Corporations Act.
According to the court, customers using the product were entering into fixed-term loan agreements, not investing in a pooled scheme. The product’s structure, based on individual crypto loans with predetermined interest rates, gave users no exposure to Block Earner’s wider business operations — a crucial factor in the judges’ reasoning.
This ruling directly challenges the Australian Securities and Investments Commission (ASIC), which brought the original case against Block Earner in November 2022. The court has now ordered ASIC to pay legal costs for both the original case and the appeal. In a statement released on April 22, ASIC said it is “considering this decision.”
Despite the victory, Block Earner confirmed it won’t relaunch the product, which was shuttered when the legal battle began. However, Coombes emphasized that crypto-backed loan products remain at the heart of the company’s roadmap.
He also called for a cooperative approach to regulation going forward, acknowledging the complexity of governing emerging technologies.
Back in February 2024, an earlier court decision had sided with ASIC, finding that the yield-bearing products required a license. But in a June 2024 judgment, the court chose not to impose financial penalties on Block Earner, citing the firm’s honest conduct and its reliance on legal counsel before launching the product. ASIC appealed that ruling, which ultimately led to Monday’s reversal.
The case now stands as a potential legal precedent for how Australian law interprets crypto-financial offerings — and could influence how similar products are treated in the future.
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