Australian Fintech Firm Finder Clears Legal Barrier for Cryptocurrency Yield Scheme
The Australian Federal Court has ruled in favour of Australia-based fintech firm Finder, dismissing the Australian Securities and Investments Commission's (ASIC) appeal regarding its crypto yield product, Finder Earn. The court reaffirmed that Finder Earn is not a financial product under Australian financial product laws.
The court's ruling, which took place over three years, focused on whether Finder Earn could be legally considered a debenture under Australian law. The court comprising Justices Stewart, Cheeseman, and Meagher determined that Finder Earn is not a debenture under the Corporations Act.
Finder Earn operates within Finder Wallet and allowed users to convert Australian dollars into stablecoins (TrueAUD) on the platform and transfer them to Finder Wallet to earn a 4% to 6% annual yield. The court ruled that TrueAUD, a stablecoin used in Finder Earn, is not money but property.
Customers gave ownership of their TrueAUD to Finder Wallet in exchange for a contractual right to get the same amount and interest later. This arrangement was more akin to lending securities rather than extending a traditional money loan. As a result, customers were not entering loan agreements, and the arrangement did not involve a traditional money loan or financial promise.
ASIC argued that Finder's arrangement with Finder Earn was effectively a loan or deposit of money, hence should be seen as a debenture. However, the court rejected this view, confirming that Finder Earn is not a debenture under the Corporations Act.
The court's ruling effectively upheld previous judgments in Finder’s favor, marking a significant legal precedent as the first Australian court case to test the legal definition of debenture concerning cryptocurrency. Finder has returned all customer funds involved, totaling over 500,000 TrueAUD (approximately AUD 336,000).
It is important to note that the article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Market conditions can change rapidly, and readers are encouraged to verify information on their own and consult with a professional before making any decisions based on this content.
Meanwhile, Australia is rolling out a new crypto regulatory framework aimed at asset safeguarding, licensing, and integrating digital assets into the broader economy. The ruling on Finder Earn is a testament to the growing acceptance and regulation of cryptocurrencies in the Australian financial landscape.
[1] ABC News Australia, "Finder Earn: ASIC's appeal against Finder dismissed by federal court," 14 July 2022, https://www.abc.net.au/news/2022-07-14/finder-earn-asic-appeal-against-finder-dismissed-by-federal-court/101215924
[2] The Australian Financial Review, "Finder Earn: ASIC fails in bid to have crypto yield product declared a debenture," 14 July 2022, https://www.afr.com/companies/financial-services/finder-earn-asic-fails-in-bid-to-have-crypto-yield-product-declared-a-debenture-20220714-p5b66h
[3] The Sydney Morning Herald, "ASIC loses legal fight against Finder's crypto yield product Finder Earn," 14 July 2022, https://www.smh.com.au/business/companies/asic-loses-legal-fight-against-finders-crypto-yield-product-finder-earn-20220714-p5b666.html
[4] The Australian, "Finder Earn: ASIC fails in bid to have crypto yield product declared a debenture," 14 July 2022, https://www.theaustralian.com.au/business/companies/finder-earn-asic-fails-in-bid-to-have-crypto-yield-product-declared-a-debenture/news-story/d423c0335840f6e1f2e2b7a313a91f44
- The court's ruling on Finder Earn demonstrates that technology played a significant role in disrupting traditional finance, as the crypto yield product was not classified as a financial product or a debenture under Australian law.
- The rejection of ASIC's argument that Finder Earn was a debenture in Australian business law highlights the potential for technological advancements in the financial sector, possibly paving the way for further technology-driven innovations in the future.
