An Australian court has dismissed allegations relating to Block Earner’s DeFi “Access” service in a legal case brought by the Australian Securities and Investments Commission (ASIC).
Justice Ian McNeil Jackman, who presided over the case, has delivered a split decision regarding the case.
Despite dismissing allegations relating to the company’s DeFi “Access” service, it ruled that Block Earner had engaged in unlicensed financial services with its crypto-backed Earner product.
ASIC Accused Block Earner of Providing Unlicensed Services
ASIC sued Block Earner in November 2022, accusing the company of providing unlicensed fixed-yield earning products based on crypto assets.
It is worth noting that Block Earner, with support from prominent crypto exchange Coinbase, had voluntarily withdrawn its fixed-yield “Earner” service during the same month.
BREAKING: Block Earner, an Australian fintech #crypto company, has been found to have engaged in unlicensed financial services activities.
Importantly, Block Earner had argued that it had considered itself a “digital currency exchange”, so thought it only had to meet the… pic.twitter.com/JSNrWIBCPO
— Inoke Faletau (@InokeFaletau) February 9, 2024
ASIC’s Deputy Chair Sarah Court noted the importance of the court’s decision, stating that it provides clarity on when crypto-backed products should be considered financial products requiring licensing under the law.
“This important decision provides some clarity as to when crypto-backed products should be considered financial products which require licensing under the law,” she said in a comment.
“Firms offering products with crypto-assets must carefully consider whether their offerings are financial products under the existing regime. And, if they are, ensure that they are appropriately licenced and authorised before distributing them.”
Block Earner to Resume Offering DeFi “Access” Service
With the dismissal of allegations against Block Earner’s DeFi “Access” service, the company can continue to offer this particular service.
A scheduled hearing on March 1, 2024, will determine the fine that Block Earner will be required to pay for its engagement in unlicensed financial services conduct.
It is worth noting that crypto has been under increasing scrutiny in Australia.
Back in May, cryptocurrency exchange Binance Australia told customers they would lose access to Australian dollar deposits and withdrawals due to a decision by its third-party service provider.
In July, officials from the Australian Securities and Investments Commission (ASIC) even conducted searches at Binance Australia‘s offices.
Moreover, in March, Australia’s prudential regulator instructed banks to report their exposures to crypto firms and startups following the collapse of the Silicon Valley Bank and the resulting turmoil in the banking sector.
The APRA asked local banks to improve their reports on crypto assets and provide daily updates to the regulator to gain more insight into potential vulnerabilities in the system.
In October, the Australian government also unveiled a proposal intended to subject digital asset platforms to the same laws that govern other financial services providers.
As part of the plan, crypto platform operators will be required to obtain a financial services license, as well as continuous monitoring and routine audits of customer funds.
In response to increasing restrictions on crypto payments, Blockchain Australia, an industry body representing the Blockchain and digital currency industry in Australia, has launched new initiatives to tackle the issue of crypto scams and frauds.
Under the new plan, the body will take numerous measures, including education programs, roundtables, and more.