The Australian Securities and Investment Commission (ASIC), the nation’s finance watchdog, has announced its intention to appeal a lower court’s ruling in favor of fintech company Block Earner. The ruling stated that Block Earner’s cryptocurrency-related fixed-yield earning service does not qualify as a financial product.
On May 21, ASIC expressed a desire to present an appeal to the High Court of Australia. The aim is to seek a clear definition of what constitutes a ‘financial product’ and to specify the regulations applicable to interest-earning products and conversion of assets from one form to another.
“The definition of a financial product was formulated in a broad and technology-neutral manner. We believe it is in public interest to seek further clarification,” stated ASIC. “This clarity is vital, not just for crypto-assets, but for all financial products and services.”
On April 22, Federal Court Justices David O’Callaghan, Wendy Abraham, and Catherine Button ruled that Block Earner’s crypto-related fixed-yield earning product is not a financial product, a managed investment scheme, nor a derivative under the Corporations Act.
ASIC’s application will be considered by the court, but special leave is required for an appeal to the High Court. This is only granted in cases where significant legal questions or matters of public interest are at stake.
A spokesperson for Block Earner informed Cointelegraph that the issue has evolved into a wider legal question regarding the definition of a financial product. This extends “beyond Block Earner and the crypto sector.”
“We remain confident in the soundness of the April ruling by the Full Federal Court. This decision upheld the integrity of our operations and was well-reasoned,” said the spokesperson. “We will address ASIC’s application through the appropriate legal channels.”
ASIC initiated legal action against Block Earner in November 2022, arguing that the company required a financial services license to offer its yield product. This was available from March 17, 2022, until the company ceased the service on Nov. 16, 2022.
In February 2024, an initial ruling by an Australian court stated that Block Earner would need a financial services license to operate its crypto yield-bearing products. Though, a subsequent June 2024 ruling in Australia’s Federal Court exempted Block Earner from financial penalties as it had “acted honestly” and sought legal advice prior to launching the products.
On July 9, 2024, Block Earner appealed the Federal Court’s decision that it required a financial services license.
