Australia's High Court has delivered a unanimous 7-0 ruling in favor of the Australian Securities and Investments Commission (ASIC), finding that Block Earner's former fixed-yield crypto product required a financial services license under existing law. According to court documents from June 17, the High Court determined that the product offered by Web3 Ventures Pty Ltd, which operates as Block Earner, functioned as a facility for financial investment and also met the legal definition of a derivative. The court found that investor returns depended on movements in underlying digital asset values and exchange rates, overturning a 2025 appeal court ruling that had previously sided with the company. The 7-0 ruling of the Full Bench ends four years of legal action and appeals, overturning last year's decision by the Full Federal Court, which had previously found in favor of Web3 Ventures. As reported by The Block, this represents one of the biggest wins for crypto regulators anywhere in the world, sending a clear message to every platform offering yield on digital assets in Australia that if it walks like a financial product and quacks like a financial product, the regulator is coming for you.
The dispute has moved through several stages of Australia's judicial system over the past four years. ASIC launched civil penalty proceedings against Block Earner in November 2022 over concerns that the Earner product had been offered without the required license. The Federal Court initially sided with ASIC in February 2024, ruling that Block Earner had operated an unregistered managed investment scheme, though it later decided in June 2024 not to impose financial penalties. ASIC challenged that outcome and filed an appeal in the same month, with Block Earner lodging a cross-appeal on July 9, 2024. The Full Federal Court allowed Block Earner's cross-appeal and dismissed ASIC's appeal on April 22, 2025, but the High Court has now overturned that decision. The legal journey was particularly winding, with ASIC first winning at the Federal Court level in 2024, Block Earner successfully appealing to the Full Federal Court in April 2025, and ASIC then seeking special leave to appeal to the High Court, which was granted in September 2025. Oral arguments were heard on March 12, 2026, and the court delivered its ruling roughly three months later. As part of the conditions for granting special leave, ASIC is required to cover Block Earner's legal costs related to the High Court hearing. The matter now returns to the Full Federal Court, which will consider ASIC's appeal relating to penalties tied to earlier proceedings against the company. There has been no finding of customer loss, dishonesty, or misconduct in the proceedings.
ASIC Chair Sarah Court welcomed the High Court's outcome, stating that the ruling supports the regulator's long-held view that Australia's financial product laws apply to new technologies without requiring legislative changes. "This reinforces ASIC's long-standing position that the definition of financial product is broad and technology neutral and so captures new and emerging products without the need to amend the legislation," Court said in a statement on Wednesday. The ruling means ASIC now has clear guidance that when crypto products promise a return fall within the existing financial services regulatory regime. "We continue to believe that legal clarity for Australia's digital asset sector should come through proper legislative reform, not retrospective litigation," ASIC noted, emphasizing that it's unfortunate such significant questions about digital asset regulation had to be tested through enforcement against a small startup. The case has particular significance because ASIC did not need Parliament to pass a crypto-specific law - the regulator argued, and the High Court agreed, that the existing definition of "financial product" in the Corporations Act is tech-neutral enough to capture yield-generating crypto products. The ruling means that any platform operating in Australia and offering yield on crypto assets needs to seriously evaluate whether it requires an AFSL, with the High Court's reasoning that fixed-yield crypto lending constitutes both a financial investment facility and a derivative casting a wide net.
Despite the legal dispute centering on the Earner yield product, Block Earner voluntarily shut down the offering in November 2022 and has since redirected its business toward lending services. In May 2026, the company received an Australian Credit Licence and announced plans to develop crypto-backed home loans. At the time, Block Earner said the product would allow borrowers to use Bitcoin as collateral for home financing without selling their holdings. The licence was notable because it represented the first time a digital asset platform in Australia had been authorized to provide credit products under its own license. As reported by The Block, Block Earner has since shifted its business model away from yield products, marking a significant transformation from its original crypto yield offering. The Earner product itself offered 7% returns on stablecoins like USDC and 4% on other eligible crypto assets, running from March to November 2022 before being voluntarily discontinued. Block Earner CEO Charlie Karaboga acknowledged the ruling but expressed disappointment, emphasizing that the Earner product was shut down back in 2022 and calling for legislative reforms around how enforcement actions are handled. The immediate practical consequence is that any platform operating in Australia and offering yield on crypto assets needs to seriously evaluate whether it requires an AFSL. The case does not relate to Block Earner's current or future products, including its crypto-backed lending activities under its recently granted Australian Credit Licence.
While the High Court ruling has resolved the primary dispute over the Earner product's regulatory classification, one significant issue remains unresolved. The matter now returns to the Full Federal Court for ASIC's appeal against a June 2024 Federal Court ruling that relieved Block Earner from liability for penalties over the Earner product. ASIC had subsequently appealed this penalty judgment, and the case will now proceed to the Full Federal Court for consideration of this separate legal matter. The penalty phase, now back before the Full Federal Court, will also be worth watching closely, as if the penalties are relatively modest, given that the product was voluntarily discontinued, the deterrent effect may be limited. If they are substantial, it could chill innovation in the Australian crypto sector more broadly. The ruling also means that both sides will have to bear their respective costs for their cross-appeals, though the court did rule that ASIC pay Block Earner's costs in its successful appeal. This represents the final chapter in what has been a lengthy legal battle that began in 2022 and has now been resolved through the High Court's definitive ruling. Separate from these legal proceedings, Block Earner will continue to progress its application for an Australian Financial Services Licence as part of its broader regulatory roadmap, ahead of the implementation of Australia's Digital Assets Framework. The reforms are expected to extend the financial services licensing framework to parts of the digital asset sector, consistent with Block Earner's focus on operating within Australia's regulated financial system.
