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Court Rules in Favor of Crypto Lender as Regulator’s Suit Against Block Earner is Dismissed

In a significant victory for the crypto lending platform Block Earner, the Federal Court of Australia has ruled that it does not require an Australian financial services license to offer its crypto-linked 'Earner' product.

This decision overturns a previous ruling by the Australian Securities and Investments Commission (ASIC), which sought to impose penalties for alleged violations regarding financial product regulations.

The court concluded that the Earner product, which allowed customers to loan specified cryptocurrencies for a fixed interest rate, should be defined as a loan rather than a managed investment scheme.

ASIC's lawsuit had initially claimed that Block Earner violated corporation laws, seeking penalties that could have reached up to $350,000.

However, this recent judgment not only absolves Block Earner of any financial penalties but also orders ASIC to cover all legal costs incurred during the proceedings, including appeals.

Despite this legal triumph, Block Earner has expressed no intention to relaunch the Earner product, which was discontinued in November 2022.

Co-founder James Coombes emphasized that the case underscores the necessity of evolving regulations to keep pace with technological advancements in finance.

He warned that without updated guidance, Australia risks losing fintech innovation to jurisdictions that provide better support for responsible crypto business.

The ASIC has stated that it is currently reviewing the court's decision and its implications for future regulatory actions.

This ruling marks a critical moment for the crypto industry in Australia, highlighting the need for regulatory clarity as the sector continues to develop.