In an appeal brought by ASIC, the High Court has unanimously found that the fixed-yield digital asset product 'Earner' offered by Block Earner was a financial product, and that Block Earner consequently required an Australian financial services licence.
The 7-0 ruling overturns the Full Federal Court's previous decision in 2025 (25-062MR).
From March to November 2022, Block Earner offered Earner, which provided investors with fixed yield returns from digital assets.
The High Court found that Earner was a financial product requiring a financial services licence, as it was a facility through which an investor made a financial investment.
The High Court confirmed it was sufficient that investors' funds were used or intended to be used to generate a return for both the investor and the issuer, noting 'any contention otherwise would ignore the commercial reality of any such financial investment.'
The High Court also accepted ASIC's argument that Earner was a derivative as the amount returned to investors varied by reference to the value of the digital asset and exchange rates.
ASIC took this action because of concerns Earner was offered without a licence, leaving investors without important protections (22-324MR).
ASIC Chair Sarah Court said 'ASIC welcomes this important decision which clarifies when products that provide a return fall within the existing financial services regulatory regime.
'This reinforces ASIC's long-standing position that the definition of financial product is broad and technology neutral and so captures new and emerging products without the need to amend the legislation.'
In commenting on the financial product definitions in the Corporations Act 2001 (the Act), the High Court emphasised that the legislative framework is deliberately broad and adaptable.
In determining that Earner was a financial product, the High Court focused on the underlying arrangements and contractual substance of Earner, rather than how it was labelled or marketed.
'Firms offering products that provide a return to consumers or involve the conversion of assets must carefully consider whether their offerings are financial products, and if so, ensure they are appropriately licensed or authorised before distributing them,' Ms Court continued.
The matter will now return to the Full Court of the Federal Court for ASIC's appeal against the penalty judgment of the Federal Court.
