Block Earner prevails over ASIC, which was ordered to pay proceedings' costs
The Federal Court’s Full Court allowed an appeal by Web3 Ventures Pty Ltd, trading under the name Block Earner, a digital asset service provider and digital currency exchange registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC).
Block Earner did not hold an Australian financial services licence (AFSL), according to a media release from the Australian Securities and Investments Commission (ASIC).
On 9 February 2024, the Federal Court ruled that Block Earner’s fixed-yield digital asset-related offering, called the Earner product, was a financial product and that Block Earner thus engaged in unlicenced financial services conduct when it offered the Earner product from March to November 2022.
ASIC alleged that Block Earner’s variable-yield digital asset-related offering, called the Access product, was a financial product and that Block Earner thus needed to obtain an AFSL and register the product as a managed investment scheme. The Federal Court disagreed with these allegations of ASIC.
On 4 June 2024, the Federal Court relieved Block Earner from its liability to pay a penalty for contraventions involving unlicensed financial services, incurred when it offered the Earner product. On 18 June 2024, ASIC appealed this decision to relieve Block Earner from liability.
On 9 July 2024, Block Earner cross-appealed the Federal Court’s finding that it needed a financial services license to offer its Earner product on the basis that it was a financial product.
On 6 March 2025, the Full Court of the Federal Court heard ASIC’s appeal and Block Earner’s cross-appeal and decided to reserve judgment.
The Full Court of the Federal Court overturned the Federal Court’s original decision. The Full Court allowed Block Earner’s appeal, dismissed ASIC’s appeal, and ordered ASIC to pay the costs of the proceedings, including the appeals.
The Full Court found that Block Earner’s Earner product was not a financial product and that Block Earner thus did not require an AFSL to offer this product. Given this finding, the Full Court concluded that it did not need to rule on the Federal Court’s decision to relieve Block Earner from liability to pay a penalty.
“The Court’s decision significantly narrows the scope of when fixed-yield crypto offerings might be considered financial products,” wrote Hall & Wilcox fintech and blockchain lead John Bassilios and lawyer Ali Alansari in the article Crypto clarity: Court rules Block Earner did not breach financial services laws. “It confirms that what matters most is the legal structure and obligations created under a product – not its economic function or how it might appear to operate.”
ASIC said in its media release that it is considering the Full Court’s decision.
“This is welcome news for crypto platforms, DeFi projects and fintech’s offering yield-generating products without an AFSL,” Bassilios and Alansari wrote. “The judgement provides more clarity and may encourage businesses to revisit product offerings that were previously paused due to regulatory risk.”
