- Full Federal Court rules Block Earner’s discontinued crypto lending product isn’t a financial product under Australian law.
- ASIC lost an appeal against Block Earner and was ordered to pay legal costs after the court dismissed their case.
- The court ruling clarifies how blockchain-based lending fits Australia’s evolving crypto regulatory framework.
The Full Federal Court of Australia determined that Block Earner’s retired crypto lending product, Earner, failed to meet the criteria for financial product regulation. The Court threw out former decisions that allowed the Australian Securities and Investments Commission (ASIC) to penalize the Block Earner company. The Court recognized Earner’s operations as a fixed-term loan mechanism instead of a managed investment scheme.
The investors who used Block Earner received a fixed interest payment through their digital asset loans. Instead of pooling funds, the Court recognized that no investor funds belonged to the company and investors maintained separate exposure from corporate financial performance. Block Earner operated with its generated revenue to fulfill payment debts toward customer agreements.
Australian financial law obtains its application structure for particular blockchain-based lending solutions through this court ruling. The Court declared that transactions failed to fulfill the Corporations Act regulatory requirements defining managed investment schemes or other financial facilities.
ASIC Ordered to Pay Legal Costs After Appeal Dismissed
In 2022, ASIC stepped forward as the Australian financial regulator to bring proceedings against Block Earner. During that period, ASIC maintained that Block Earner needed an Australian Financial Services Licence to conduct crypto lending. The Full Federal Court’s most recent decision obligates ASIC to reimburse Block Earner for its litigation costs from both previous hearings.
The regulatory agency must pay all expenses linked to Block Earner’s court defense, which ran through its initial assessment and subsequent appeal phase. ASIC’s public announcement documented its acknowledgment of the court’s ruling while the organization reviewed its implications. The Block Earner discontinued its Earner product in 2022, right after ASIC filed its legal proceedings. Although the court decision was favorable, the organization has announced it will not bring the product back to its market.
Implications for Australia’s Crypto Regulatory Landscape
Decisions in this matter will impact the regulatory status of digital asset services within Australia’s financial sector. Block Earner’s product design follows current regulations because CEO Charlie Karaboga expressed this goal to customers. The court ruling implies that particular crypto-based financial operations do not require existing licensing requirements. Block Earner indicates that about four million Australians maintain ownership of digital assets.
This case could establish guidelines for judicial and regulatory institutions to work with crypto lending arrangements throughout the forthcoming years. The Australian government works on creating expanded digital asset regulations as a separate initiative.
The initiative seeks to defend consumers while monitoring the market to support market adaptations through additional regulatory powers. Future enforcement operations will need well-defined regulatory classifications for digital asset products because the proposed reforms will make major platforms license their operations, but exempt smaller entities
