Key Takeaways
- The court found that the Earner product did not meet the criteria under the Corporations Act to be classified as a financial product or managed investment scheme.
- Block Earner has welcomed the judgment, describing it as a clarification of how crypto-related financial products can be interpreted under current laws
In a significant ruling for Australia’s cryptocurrency sector, the Full Federal Court has overturned a prior decision requiring fintech company Block Earner to hold a financial services license for its discontinued crypto-yield product, known as “Earner.”
The decision, delivered on April 22, also rejected an appeal by the Australian Securities and Investments Commission (ASIC), effectively ending a legal battle that began in late 2022.
The court found that the Earner product did not meet the criteria under the Corporations Act to be classified as a financial product or managed investment scheme. According to the judgment delivered by Justices David O’Callaghan, Wendy Abraham, and Catherine Button, Block Earner’s offering functioned as a loan agreement between the company and its customers, rather than as an investment product subject to licensing requirements.
Customers had entered into individual contracts with Block Earner to lend their digital assets in exchange for a fixed return. The court noted that there was no pooling of funds, no shared exposure to the company’s broader financial performance, and that customer returns were based solely on fixed contractual terms.
The decision nullifies any penalty claims previously sought by ASIC and orders the regulator to cover the legal costs incurred during the proceedings and appeal process. ASIC issued a short public statement acknowledging the outcome and said it is reviewing the ruling, but has not confirmed whether it will escalate the matter to the High Court.
The case, which began when ASIC initiated civil proceedings in November 2022, initially led to a partial ruling in February 2024 that Block Earner’s crypto-yield products fell under the scope of regulated financial services. However, the court at the time declined to impose penalties, citing that Block Earner had acted transparently and based its product decisions on legal advice.
Block Earner has welcomed the judgment, describing it as a clarification of how crypto-related financial products can be interpreted under current laws. CEO Charlie Karaboga said the company’s intention was always to align its product design with existing legal frameworks. “We’ve worked hard to build within the regulatory environment and are pleased with the clarity this decision brings,” he said.
Chief Commercial Officer James Coombes also emphasized the broader implications of the case for the digital finance space. He noted that treating crypto assets consistently with other asset classes could enable responsible innovation. “This outcome provides a foundation for Australian fintechs to develop secure, compliant financial products,” he said.
Although the ruling clears the company of all allegations, Block Earner has confirmed it will not relaunch the Earner product. It instead plans to focus on developing new crypto-backed lending offerings. “While we’re moving forward, we also acknowledge the regulatory challenges,” said Coombes. “We’re committed to working constructively with regulators to help shape balanced oversight.”
