Australia’s financial regulator will seek the High Court’s permission to appeal a lower court’s ruling favoring fintech firm Block Earner, which found the company’s crypto-linked fixed-yield earning service is not a financial product.
The Australian Securities and Investment Commission said on May 21 that it wants to ask the High Court of Australia to clarify what the definition of a financial product is and clarify the circumstances when an interest-earning product and the conversion of assets from one form to another are regulated.
“The definition of financial product was drafted in a broad and technology-neutral way, and ASIC believes it is in the public interest to clarify this,” the watchdog said.
“This clarification is important as it applies to all financial products and services whether they involve crypto-assets or not.”
On April 22, Federal Court Justices David O’Callaghan, Wendy Abraham and Catherine Button found that Block Earner’s crypto-linked fixed-yield earning product is not a financial product, a managed investment scheme or a derivative under the Corporations Act.
ASIC said the court will consider its application. Special leave is required in an appeal to the High Court, and it’s only granted in cases where it would answer significant legal questions or matters of public interest.
A Block Earner spokesperson told Cointelegraph the matter has now escalated to a “broader legal question” around the definition of a financial product, which extends “well beyond Block Earner, and the crypto sector.”
“We believe the Full Federal Court’s April ruling was a strong and well-reasoned decision that upheld the integrity of our operations,” the spokesperson said. “We remain confident in the soundness of that judgment and will respond to ASIC’s application through the appropriate legal channels.”
Legal saga ongoing since 2022
ASIC first launched legal proceedings against Block Earner in November 2022, arguing the company needed a financial services license to offer its yield product, which was available from March 17, 2022, until the company shut it down on Nov. 16, 2022.
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In February 2024, an Australian court initially ruled the fintech firm would need a financial services license to operate its crypto yield-bearing products.
Another June 2024 ruling in Australia’s Federal Court released Block Earner from any financial penalties because it had “acted honestly” and pursued its legal opinions before launching the products, which ASIC appealed.
Block Earner appealed the Federal Court’s decision that it needed a financial services license on July 9, 2024.
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