Australia’s High Court has unanimously ruled that the digital asset product offered by Block Earner required an Australian financial services licence, aligning with the Australian Securities and Investments Commission’s (ASIC) stance. The 7-0 decision determined that Block Earner’s fixed-yield product, “Earner,” functioned as a financial investment facility and also qualified as a derivative due to its returns being linked to the value of underlying digital assets and exchange rates.
Key Takeaways
- The Australian High Court ruled unanimously that Block Earner’s fixed-yield product required an Australian financial services licence.
- This decision supports ASIC’s position that financial product definitions are broad and technology-neutral.
- The case will return to the Full Federal Court to determine penalties for Block Earner.
- Block Earner ceased offering the “Earner” product in November 2022 and has since pivoted its business model.
- The company now holds an Australian Credit Licence and is developing crypto-backed home loan offerings.
This landmark ruling has significant implications for the regulatory landscape of digital assets in Australia. The case will now proceed back to the Full Federal Court to adjudicate the penalties associated with Block Earner’s prior operations. ASIC initiated civil penalty proceedings in November 2022, citing concerns that the “Earner” product was offered without the necessary licensing, thus depriving investors of essential regulatory protections.
Previously, the Federal Court had found in February 2024 that Block Earner had operated an unregistered managed investment scheme. However, in June of the same year, the court decided to waive financial penalties. ASIC appealed this penalty waiver, prompting a counter-appeal from Block Earner. The Full Federal Court initially dismissed ASIC’s appeal and allowed Block Earner’s cross-appeal, a decision now overturned by the High Court.
ASIC Chair Sarah Court expressed satisfaction with the High Court’s decision, emphasizing its reinforcement of the regulator’s view that existing financial product definitions are sufficiently broad and technologically agnostic. “This reinforces ASIC’s long-standing position that the definition of financial product is broad and technology neutral and so captures new and emerging products without the need to amend the legislation,” Court stated.
Block Earner, which voluntarily discontinued its “Earner” product in November 2022, has since restructured its business operations. The company obtained an Australian Credit Licence in May 2026 and is currently developing a crypto-backed home loan service. This marks a significant development, being the first instance of a digital asset platform in Australia receiving authorization to offer credit products under its own licence.
Regulatory Precedent and Future Compliance
The High Court’s decision in the Block Earner case establishes a crucial legal precedent for the classification of digital asset products within Australia’s existing financial regulatory framework. By affirming that yield-generating crypto products can fall under the purview of financial product and derivative definitions, the ruling signals that innovative financial technologies will be assessed against current laws rather than awaiting specific legislative updates. This “technology-neutral” approach, as highlighted by ASIC, suggests that companies offering similar products will need to rigorously assess their obligations under the Corporations Act 2001 and potentially seek appropriate licensing. The outcome underscores the importance of compliance for digital asset firms operating in Australia and may encourage other regulators globally to apply similar broad interpretations to emerging financial technologies.
Information compiled from materials : www.theblock.co