ASIC v Block Earner: the High Court Appeal that could redefine AFSL obligations

On 5 September 2025, ASIC announced that the High Court of Australia has granted it special leave to appeal a decision of the Full Federal Court in the Block Earner case. This appeal is shaping up to be one of the most important financial services law cases in recent years.

At issue is a deceptively simple but critical question: what counts as a financial product?

The outcome will not only determine whether a crypto yield product required an AFSL, but also clarify the boundaries of financial services law more generally — with implications for fintechs, start-ups, fund managers, and even traditional financial institutions.

Who is Block Earner?

Block Earner is the trading name of Web3 Ventures Pty Ltd, an AUSTRAC-registered digital currency exchange. From March to November 2022, it offered the “Earner” product, which allowed investors to earn a fixed return on virtual assets.

1. The scope of “financial product”

The Corporations Act 2001 defines financial products broadly and in technology-neutral terms. But courts have disagreed on how those definitions apply to emerging business models.

ASIC argues the Earner product is a financial product because it offered investors a fixed return, and therefore should have required an AFSL. The Full Federal Court disagreed, exposing a gap between ASIC’s regulatory view and judicial interpretation.

2. Interest-bearing and conversion products

ASIC wants clarity on:

• whether products offering fixed or variable yields amount to financial products; and
• whether products that involve converting assets from one form to another (e.g. crypto-to-crypto, or crypto-to-fiat yield products) fall within AFSL regulation.

These questions are central not just to crypto, but to a wide range of structured and tokenised products in the pipeline.

3. ASIC’s licensing jurisdiction

If ASIC loses, a wide class of products could remain outside the AFSL regime unless Parliament intervenes. If ASIC wins, its jurisdiction will be significantly reinforced, capturing many yield-based and asset-conversion models under AFSL law.

Although sparked by a crypto yield product, this case is not just about virtual assets. ASIC itself has emphasised that the clarification “applies to all financial products and services whether they involve virtual assets or not.”

This means the decision could reshape how the law applies to:

• Fixed-return products offered outside traditional banking.
• Tokenisation platforms bundling rights into digital or hybrid assets.
• Structured yield vehicles (including those backed by traditional assets).
• Swap or conversion models that blur the line between payments and investments.

For many businesses, the uncertainty is already slowing innovation — the High Court’s ruling may either provide confidence or significantly raise the compliance bar.

The Block Earner saga highlights a recurring challenge: the tension between technology-neutral drafting and real-world application.

• Technology neutrality – The Corporations Act aims to capture functional outcomes, not specific technologies. But this can leave courts struggling to fit novel products into categories built with traditional finance in mind.
• Managed investment schemes – Many pooled or yield products could also be schemes. The overlap between AFSL obligations and MIS regulation remains blurred.
• ASIC’s guidance vs the courts – Regulatory guides (e.g. INFO 225 on crypto assets) help industry, but are not binding on courts. Businesses face risk until appellate courts (or Parliament) provide definitive rulings.
• International comparison – Other jurisdictions (EU’s MiCA, Singapore’s PSA, the SEC’s approach in the US) are grappling with the same issues. Australia’s response will influence how competitive — or conservative — its regulatory framework appears globally.

For virtual asset service providers

• If ASIC succeeds, many existing and planned products will need an AFSL.
• Registration with AUSTRAC will no longer be sufficient — licensing obligations will expand.
• Firms should start licence-readiness planning now: mapping products, considering AFSL applications or variations, and reviewing governance.

For AFSL holders in traditional finance

• A broader definition of financial product could capture innovative yield or tokenisation products you may be piloting.
• Review whether any side-products, partnerships, or sandboxes might inadvertently fall into scope.

For start-ups and scale-ups

• Regulatory risk is material. Even if your model seems outside current licensing categories, ASIC may pursue enforcement until the law is clarified.
• Early structuring advice is critical before launch.

1. Track the High Court proceedings – This appeal will set a national precedent.
2. Review your product suite – Identify features that resemble investment, pooling, or yield generation.
3. Assess AFSL exposure – Consider whether you need to:
   • apply for an AFSL;
   • vary an existing AFSL; or
   • partner with an authorised representative.
4. Strengthen governance and disclosure – Even outside AFSL law, ASIC is scrutinising consumer protection standards.

The High Court’s decision in ASIC v Block Earner will be a defining moment for financial services regulation in Australia.

While the case arises from virtual assets, its impact will be felt across all financial products — from fintech start-ups to established institutions.

At Ming Dao Law, we are already advising clients on how to:

• structure products amid legal uncertainty;
• prepare for potential AFSL obligations; and
• manage compliance risks in fast-moving areas of law.