Block Earner Wins Court Fight Against ASIC Over Crypto Lending

Australian fintech startup Block Earner has won a major legal battle against the country’s financial regulator, which could affect how crypto-backed lending is treated under Australian law.

After nearly three years of litigation, the Federal Court ruled that Block Earner’s “Earner” product—offering fixed-term crypto-backed loans—did not require a financial services license. The court concluded the product functioned more like a traditional loan agreement than a regulated investment vehicle.

The Australian Securities and Investments Commission (ASIC) first sued the Sydney-based firm in November 2022, alleging the product was offered without proper authorization. Block Earner voluntarily halted the service shortly after the complaint was filed.

In March 2024, Judge Ian McNeil Jackman initially sided with ASIC, a ruling the company appealed. That decision was overturned this week, with the court not only clearing Block Earner of all charges but also ordering ASIC to pay the company’s legal costs for both the original case and the appeal.

While the verdict is a win for the crypto lender, Block Earner has no plans to revive the Earner product in the Australian market, according to reports.

Earlier in March, Australia’s government, led by the center-left Labor Party, unveiled a new crypto framework that will regulate exchanges under existing financial services laws.

The proposal comes just ahead of the federal election, expected to be held on or before May 17, with polling indicating a tight race between Prime Minister Anthony Albanese’s Labor Party and the Coalition, led by Peter Dutton.

The new rules will apply to crypto exchanges, custody services, and some brokerage firms that trade or store digital assets. These companies will face compliance requirements similar to those in traditional financial services, including safeguarding customer assets, obtaining an Australian Financial Services Licence, and meeting minimum capital requirements.

However, the new framework will not cover the entire digital asset ecosystem. Smaller platforms and those that don’t meet certain size thresholds, along with firms involved in blockchain software or non-financial digital assets, will be exempt. Additionally, payment stablecoins will be classified as a type of stored-value facility, but some stablecoins and wrapped tokens will be excluded from the regulations.