Australia High Court Sides With Regulator in Crypto Yield Case

Australia's High Court unanimously ruled Wednesday that Block Earner's crypto yield product required a financial services licence, backing the Australian Securities and Investments Commission in a case that tests how existing financial laws apply to digital assets.

The seven-justice panel rejected Block Earner's argument that its "Earn" product fell outside the definition of a managed investment scheme. ASIC had said the product, which paid users a yield on crypto deposits, qualified as a financial product under the Corporations Act and needed an Australian financial services licence.

The court sent the case back to the Federal Court to determine penalties. ASIC first sued Block Earner in late 2022 over the unlicensed offering.

The decision cements ASIC's technology-neutral approach – the regulator treats crypto products the same as traditional financial products regardless of the underlying technology. Other Australian platforms that offer yield-bearing or lending products now face a clearer legal standard. ASIC has said it expects all such platforms to hold the appropriate licence or face enforcement action.

Block Earner said in a statement it was disappointed with the ruling but would cooperate with the Federal Court on the penalty phase. The company had already pulled the Earn product during the initial litigation.

A penalty hearing has not yet been scheduled. ASIC declined to comment beyond its public statement welcoming the decision.