Court Grants ASIC Authorization to Contest Block Earner Regarding Crypto's Fixed-Yield Product

The Australian Securities and Investments Commission (ASIC) has been given the green light to appeal a ruling in favour of digital asset provider Block Earner. The case, which concerns whether Block Earner's fixed-yield product, Earner, qualifies as a financial product under Australian law, has been a topic of discussion since early 2024.

ASIC, responsible for overseeing 3.6 million companies, 15,500 financial advisers, and thousands of other entities, launched proceedings against Block Earner in 2022. The commission alleged that the company provided unlicensed financial services and ran an unregistered investment scheme. However, the Full Federal Court previously ruled that Block Earner did not need a financial services licence for the product.

In a turn of events, the High Court of Australia granted special leave for ASIC's appeal against Block Earner. This decision comes with a condition that ASIC will cover the legal costs of Block Earner. The company cross-appealed to challenge the licence requirement.

ASIC's reforms aim to simplify compliance, reduce costs, clarify rules, and improve enforcement. As part of these efforts, the commission has consolidated legal instruments, reduced duplicated guidance, launched digital services to replace paper-based processes, and is testing ways to reduce obligations for small-company directors and financial advisers.

Notably, ASIC must lodge its notice of appeal within two weeks. The name of the person responsible for filing this notice is not provided in the available information. A hearing date for the appeal has not yet been set.

Block Earner, operating as Web3 Ventures, offered Earner to investors in 2022, allowing them to earn fixed returns on digital assets. The company's unlicensed conduct was found by the Federal Court in early 2024, but the company was later relieved from paying penalties. ASIC's claims, including those related to a variable-yield product, were dismissed following Block Earner's appeal.

ASIC's reforms target clearer, more accessible regulation for businesses and consumers. The commission's ongoing efforts to simplify compliance and clarify rules could have significant implications for the digital asset industry and beyond. The outcome of this appeal will be closely watched as it unfolds.

Court Grants ASIC Authorization to Contest Block Earner Regarding Crypto's Fixed-Yield Product