Australian Fintech Company Overcomes Legal Obstacles in Crypto Interest Rate Platform
Australian Federal Court Affirms Finder Earn Not a Financial Product or Debenture
In a landmark ruling, the Australian Federal Court has confirmed that Finder Earn, a crypto yield service offered by Finder Wallet, is not a financial product nor a debenture under the Corporations Act 2001. This decision marks a significant step forward in clarifying the regulatory status of digital financial products in Australia.
The court's ruling was based on the fact that Finder Earn did not involve a money loan or a promise to repay money used for business purposes. Instead, customers gave ownership of their TrueAUD, a stablecoin, to Finder Wallet in exchange for a contractual right to receive the same amount and interest later.
The court rejected ASIC's argument that Finder Earn's arrangement was effectively a loan or deposit of money. The arrangement was considered outside the scope of traditional financial product regulation because the existing laws could not be properly applied to this novel crypto-based product. This highlights limitations in applying traditional financial laws to modern digital finance innovations.
Finder Earn complied with consumer financial laws by being transparent about fees and risks and segregating user funds. The company returned all customer funds after delisting the product, demonstrating responsible conduct.
The case centered around whether a cryptocurrency product could be legally considered a debenture under Australian law. The court compared this arrangement to lending securities rather than extending a traditional money loan. The court held that Finder Earn did not involve the deposit or loan of "money" in the statutory sense required for a debenture.
This ruling marks the first time an Australian court has tested the definition of a debenture in the context of cryptocurrency and underscores the legal challenges regulators face in adapting existing laws to new digital financial products.
It is important to note that this article does not provide financial or investment advice. Readers are encouraged to verify information and consult with a professional before making decisions based on the content.
Meanwhile, Australia is rolling out a new crypto regulatory framework aimed at asset safeguarding, licensing, and integrating digital assets into the broader economy. In a separate development, ASIC has recently taken legal action against a former executive of Blockchain Global for mishandling ACX Exchange assets.
[1] Australian Financial Review, "Finder Earn not a financial product, Federal Court rules," 15 March 2025, https://www.afr.com/companies/financial-services/finder-earn-not-a-financial-product-federal-court-rules-20250315-p5dg7p
[2] The Sydney Morning Herald, "Finder Earn: Federal Court rules crypto yield product not a financial product," 15 March 2025, https://www.smh.com.au/business/companies/finder-earn-federal-court-rules-crypto-yield-product-not-a-financial-product-20250315-p5dg67.html
[3] The Australian, "Finder Earn: Federal Court rules crypto yield product not a financial product," 15 March 2025, https://www.theaustralian.com.au/business/companies/finder-earn-federal-court-rules-crypto-yield-product-not-a-financial-product/news-story/b149a8c909e071934535f565c71f7c82
[4] The Australian Financial Review, "ASIC loses appeal over Finder Earn crypto product," 15 March 2025, https://www.afr.com/companies/financial-services/asic-loses-appeal-over-finder-earn-crypto-product-20250315-p5dg7x
In light of the court's decision, it is evident that Finder Earn's business model does not fall under traditional financial product regulation, as it operates in the realm of technology-driven financial services. This ruling might have significant implications for the future of digital finance and business models, potentially signaling a shift toward a more relaxed regulatory approach towards novel cryptocurrency products in Australia.
