The CEO of fintech firm Block Earner has criticized the “lack of clarity” in Australia’s financial licensing regime after his company was sued by the country’s financial services regulator for providing unlicensed cryptocurrency-based investment products.
Australian Securities and Investments Commission (ASIC) he announced On November 23 local time, it launched civil proceedings against the company for offering three cryptocurrency-linked fixed-income products without an Australian Financial Services (AFS) licence.
ASIC said the products should be licensed because they were “managed investment schemes” where investors contribute money, merged together for interest in the scheme.
Named “Crypto Earner”, “USD Earner” and “Gold Earner”, the products offered returns through users depositing Australian dollars, which would be converted into Bitcoins (BTC), ether (ETH), USD coins (USDC) or PAX Gold (PAXG) depending on the product by Block Earner’s Website.
ASIC Deputy Chair Sarah Court aired her concerns that Block Earner was offering products without “appropriate registration” or an AFS licence, which she claimed left “consumers without important protections”, adding:
“Just because a product depends on a crypto-asset doesn’t mean it doesn’t fall outside the Financial Services Act.”
In an emailed statement to Cointelegraph Block Earner CEO and co-founder Charlie Karaboga, although the firm “[understands] background’ it was a ‘disappointing result’.
He said he welcomed the regulations, saying the firm had “spent significant resources building the regulatory infrastructure” to be able to offer services “under the existing guidance provided by ASIC”.
Karaboga aimed at unclear regulatory environment for crypto in the country and said “lack of clarity […] creates friction between regulators and innovators,” he adds:
“In an ideal world, we would build these products in a regulatory sandbox with clearer licensing regimes. We look forward to working with ASIC and other regulators in this space in the future.”
According to Karaboga, Block Earner has applied for a credit license and informed ASIC that it will apply for an AFS license for its upcoming products as “the licensing requirements are clear”.
ASIC has previously warned crypto asset providers in the country after it took action against creators of the Qoin token.
It said its “key priority” is to target “unlicensed behavior and misleading promotion of crypto-asset financial products” after claiming that Qoin token creators are “misleading” their users.