ASIC Seeks High Court Appeal Over Crypto Yield Ruling in Block Earner Case

In a statement issued on May 21, ASIC said it intends to ask the High Court of Australia for special leave to appeal the April 22 Federal Court ruling that determined Block Earner’s fixed-yield crypto product does not fall under the definition of a financial product, nor does it qualify as a managed investment scheme or a derivative under the Corporations Act.

Regulatory Gray Area for Crypto Yield Products

The core of ASIC’s appeal lies in the legal interpretation of what constitutes a financial product. “The definition of financial product was drafted in a broad and technology-neutral way,” ASIC said in its statement, adding that it believes clarification is in the public interest. “This clarification is important as it applies to all financial products and services whether they involve crypto-assets or not.”

The regulator argues that the conversion of assets from one form to another, and the generation of interest through yield-bearing products, should fall under the scope of financial regulation. ASIC’s concern is not just about this specific product but about establishing a clear legal framework for emerging financial technologies and services.

The High Court only grants special leave in cases that raise significant legal questions or broader issues of national importance. If granted, the case could provide definitive guidance on how crypto-related financial services are to be treated under Australian law.

Block Earner Maintains It Acted in Good Faith

ASIC originally filed its case against Block Earner in November 2022, alleging that the firm offered its fixed-yield crypto product without the required financial services license. The product was active between March and November 2022, after which it was voluntarily shut down by the company.

While a February 2024 court decision sided with ASIC, requiring Block Earner to have a license, a subsequent June 2024 ruling released the firm from any financial penalties, citing that it had “acted honestly” and consulted legal experts before launching the service. Block Earner has since appealed that earlier finding as well.

The ongoing legal battle underscores the complex intersection of regulation, innovation, and public protection in the rapidly evolving crypto sector. A High Court ruling could significantly influence how both startups and regulators navigate this space moving forward.

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