High Court Set to Define Future of Digital Asset Regulation in Landmark Block Earner Appeal

The Australian Securities and Investments Commission (ASIC) has secured special leave from the High Court to appeal a decision by the Full Federal Court that ruled Block Earner, a digital asset service provider, did not require a financial services licence to offer its fixed-yield product. The Full Federal Court’s April 2025 ruling overturned an earlier Federal Court decision, which had found that Block Earner engaged in unlicensed financial services. The High Court’s grant of leave is conditional upon ASIC covering Block Earner’s costs of the appeal. The appeal will be heard at a date yet to be set [1].

Block Earner, the trading name of Web3 Ventures Pty Ltd, offered its Earner product from March 2022 to November 2022, allowing investors to earn fixed yield returns from specified digital assets. ASIC initially argued that this product constituted a financial service under the Corporations Act, necessitating a financial services licence. However, the Full Federal Court found that the product did not meet the definition of a financial product, managed investment scheme, or derivative under the relevant legal framework [1]. The High Court’s intervention marks a pivotal moment in determining how interest-earning products involving digital assets are classified under Australian financial regulations.

ASIC has emphasized the importance of clarifying the definition of a financial product, which it describes as having been drafted in a “broad and technology-neutral way.” The regulator argues that such clarification is necessary to ensure consistency in how financial services are regulated across both traditional and digital asset markets. In its appeal, ASIC aims to establish whether products involving the conversion of assets from one form to another, or generating interest-based returns, should be subject to regulatory oversight [1].

Block Earner, however, has framed the appeal as an opportunity to contribute to the development of a regulatory framework that supports innovation in the digital assets sector. CEO and co-founder Charlie Karaboga expressed support for the High Court’s decision to allow the appeal, noting that clear regulations are essential for fostering a fair and competitive environment for private companies. He emphasized the importance of “constructive engagement between regulators, innovators, and the courts” in addressing the complexities of a rapidly evolving financial landscape [2].

The appeal process follows a series of legal proceedings. ASIC initially filed civil penalty proceedings in the Federal Court in November 2023, alleging that Block Earner operated without the necessary licences for its financial services. The Federal Court ruled in June 2024 that the Earner product was not a financial product, relieving Block Earner of liability for penalties. This decision was later overturned by the Full Federal Court in April 2025, which sided with Block Earner in its cross-appeal. The High Court’s involvement now brings the legal dispute to its highest judicial level [1].

The outcome of this case is expected to have far-reaching implications for the regulatory treatment of digital asset-based financial products in Australia. The High Court’s ruling could shape how such products are classified under the Corporations Act, affecting not only Block Earner but also other firms offering similar services. With ASIC seeking clarity on the scope of financial product definitions and regulatory thresholds, the court’s decision will serve as a critical reference point for future regulatory enforcement and compliance practices in the digital asset industry [3].

Source:

[1] High Court grants ASIC special leave to appeal Block Earner decision (https://www.asic.gov.au/about-asic/news-centre/find-a-media-release/2025-releases/25-194mr-high-court-grants-asic-special-leave-to-appeal-block-earner-decision/)

[2] Block Earner says ASIC appeal is opportunity to contribute to regulatory landscape (https://www.capitalbrief.com/briefing/asics-appeal-of-block-earner-decision-to-be-heard-in-high-court-487a6431-b316-4ee4-87f4-ce7cf23b8a33/)

[3] ASIC lands special leave against Block Earner (https://www.financialstandard.com.au/news/asic-lands-special-leave-against-block-earner-179809802)