In November 2022, Australia’s financial regulator filed civil proceedings, claiming that Block Earner was required to hold a financial services license to offer its fixed-yield crypto investment products.
The Federal Court of Australia has ruled in favor of fintech company Block Earner, overturning a previous decision that required the firm to hold a financial services license for its discontinued crypto-related offerings.
In their April 22 judgment, Justices David O’Callaghan, Wendy Abraham, and Catherine Button stated that Block Earner’s crypto-linked fixed-yield product does not qualify as a financial product, managed investment scheme, or derivative under the Corporations Act.
The judges explained that Block Earner’s yield product couldn’t be considered a financial or investment product because users lent crypto on fixed terms for interest, without pooling funds to create additional returns. They noted the terms defined it as a loan, and users had no stake in the company’s broader business beyond the fixed interest agreed upon.
The Federal Court has ordered the Australian Securities and Investments Commission (ASIC), which initiated the case, to cover the legal costs of the proceedings, including appeals. In an April 22 press release, the regulator stated it is currently “reviewing the decision.”
James Coombes, Block Earner’s chief commercial officer, told media that the court’s ruling provides clarity, affirming that crypto assets should not be treated differently from other asset classes under existing legal frameworks.
“Our product was clearly structured as one where customers lent their assets to us for a fixed return,” he said. “There was no participation in the gains of a pooled asset, and therefore, no Managed Investment Scheme was in place.”
Although Block Earner won the case, it will not relaunch its Earner product, which was discontinued when the legal action began. However, Coombes emphasized that “crypto-backed loan products remain a key focus for the company.”
“We understand that regulation moving forward is a complex challenge, and we sympathize with regulators in that regard,” Coombes added. “Our hope is that a collaborative approach will lead to meaningful and positive change.”
In November 2022, ASIC initiated civil legal action, claiming that Block Earner was required to hold an Australian Financial Services License to offer its trio of crypto-linked fixed-yield earning products.
In February 2024, an Australian court initially ruled that the fintech company was required to obtain a financial services license to offer its crypto yield-generating products.
In June 2024, a separate ruling spared Block Earner from financial penalties, noting it had “acted honestly” and sought legal advice before launching its products—an outcome that ASIC later appealed.
