Federal Court rejects ASIC appeal, crypto related product did not require financial license
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The news: The full court of the Federal Court has dismissed an appeal by Australian Securities and Investment Commission’s and upheld a decision that Finder Wallet – now digital currency exchange Wallet Ventures – did not need a financial services licence to issue crypto-asset related product Finder Earn.
The context: Finder Wallet offered Finder Earn between late-February 2022 and 10 November 2022. Customers would deposit Australian dollars in their Finder Wallet accounts, which would be converted to Australian-dollar denominated stablecoins.
The customers would be paid an annual compounding return of either 4.01% or 6.01% in exchange for the use of their funds by Finder Wallet. ASIC alleged that this product amounted to a ‘debenture’, a debt instrument with a fixed rate of interest, which generally requires an Australian Financial Services licence to be issued.
The Federal Court dismissed ASIC’s case in March 2024. The financial regulator then lodged an appeal in April 2024 but that too has now been dismissed.
What they said: “This decision highlights the challenges in the current regulatory framework concerning debentures and the application of the existing financial services regime to products involving crypto assets,” the regulator said in a statement.
"ASIC is carefully considering the decision and its implications."
Finder executive chair and founder Fred Schebesta said the case and appeal is an example "of innovation outpacing regulation".
“Hopefully this case will be a jumping off point for even more open communication and collaboration between innovators and regulators – especially as emerging sectors expand exponentially in the coming years,” Schebesta said.
The sources: ASIC media release, Finder media release
