Australian Court Delivers Partial Victory to Market Regulator in Case Against Qoin Blockchain, Highlighting Distinction between Technology and Financial Product
In a recent court ruling, an Australian court mostly sided with the country’s markets regulator in its case against BPS Financial Pty Ltd (BPS) regarding its Qoin scheme.
The court made it clear that blockchain technology itself is not considered a financial product.
According to court documents and the regulator’s announcement, an Australian Federal Court largely ruled in favor of the Australian Securities and Investments Commission (ASIC) in its case against BPS Financial Pty Ltd (BPS) concerning the Qoin scheme.
Judge J Downes determined that ASIC had succeeded in its Unlicensed Conduct Case, with the exception of the period when BPS was an authorized representative of PNI Financial Services Pty Ltd. During that 10-month period, ASIC stated that BPS was exempt due to holding a non-cash payments license.
In 2022, ASIC filed a lawsuit against BPS, seeking a court ruling that would classify the entire Qoin project, including the token, blockchain, and wallet, as a financial product requiring a license.
ASIC has experienced both victories and losses in its efforts to enhance regulatory oversight through legal processes in Australia.
Part of ASIC’s argument in this case was that the Qoin Blockchain and Qoin Wallets constituted a single scheme. However, the court disagreed with this assertion.
The court order stated, “Contrary to ASIC’s submissions, the Qoin Blockchain, a means of acquiring Qoin, and a means for business operators with Qoin Wallets to register as Qoin Merchants, are not components of, and are not themselves, the mechanism that enables users to make non-cash payments.”
Experts noted that the court’s decision was significant as it rejected ASIC’s attempt to classify an entire blockchain as a “financial product” under Australian law.
“This is an important judicial recognition of blockchains as foundational technology where the use of the technology, if it breaches the law, can (and should) be prosecuted, but the technology itself stands separate,” said Michael Bacina, Blockchain Australia Chair and Digital Assets Lawyer.
The court order called for ASIC and BPS to come to an agreement on a resolution for the remaining outstanding matters, including penalties, later this month.
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