The Australian Securities and Investment Commission (ASIC) intends to seek permission from the High Court to appeal a recent court decision that favored the fintech business Block Earner. The lower court determined that Block Earner’s crypto-linked fixed-yield product is not classified as a “financial product” under the legislation.
On May 21, ASIC said it wants the High Court to clarify what exactly counts as a financial product, especially when it comes to interest-earning products and the conversion of assets. The watchdog emphasized that the definition of a financial product was designed to be broad and technology-neutral, so this clarification is important for the whole financial industry, whether crypto is involved or not.
Back in April, three Federal Court Justices ruled that Block Earner’s crypto product did not fall under the categories of a financial product, managed investment scheme, or derivative as defined in the Corporations Act.
ASIC will now await the High Court’s decision on whether to give special leave is required in an appeal. This kind of permission is only given if the case raises important legal questions or issues of public interest.
Block Earner’s spokesperson said the case has now grown into a broader legal question about what counts as a financial product — a debate that goes beyond just their company or the crypto space. They commended the Federal Court’s April decision as powerful and well-reasoned, and they expressed their continued confidence in it. They also stated that they will react to ASIC’s application using the regular legal processes.
The Ongoing Legal Battle
The dispute between ASIC and Block Earner has been unfolding since 2022. ASIC first took legal action in November 2022, arguing that Block Earner needed a financial services license to offer its yield product between March 17 and November 16, 2022.
Source: ASIC
In February 2024, an Australian court determined that Block Earner required such a license to run its cryptocurrency yield products. However, in June 2024, the Federal Court absolved Block Earner of any financial penalties, finding that the firm had behaved honestly and sought legal assistance prior to presenting its products, a decision that ASIC contested.
Block Earner then appealed the Federal Court’s licensing requirement ruling on July 9, 2024.
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