Australia court sets precedent for crypto in non-cash payments

Australia’s securities regulator has marked its first court victory, setting a precedent regarding a non-cash payment facility involving crypto.

The Australian Securities & Investments Commission (ASIC) has set a legal precedent in the local crypto market after the Federal Court found that BPS Financial (BPS) engaged in unlicensed conduct when offering the Qoin Wallet, a non-cash payment product that used a token called Qoin.

In a press release on May 3, ASIC said the court determined that BPS lacked the necessary financial services license “nor was authorised by a licence holder, to issue or provide financial advice about the Qoin Wallet.”

“Justice Downes also found BPS engaged in misleading or deceptive conduct and made false or misleading representations concerning the Qoin Wallet.”

ASIC

The ruling highlighted that BTX, the sole crypto exchange that was accepting Qoin tokens, lacked independence from BPS and didn’t allow for the exchange of various altcoins.

ASIC Chair Joe Longo underscored the significance of the ruling, marking the first court case against a crypto-based non-cash payment facility. He also added that the proceedings “should send a message to the crypto industry that their products will continue to be scrutinised by ASIC to ensure consumers are protected and that they comply with regulatory obligations.”

The court has instructed both parties to work together to determine the next steps for further hearings, which will address remaining issues including penalties. A date for the hearing will be set later in 2024.

In another development, ASIC is seeking to challenge the Federal Court’s decision to dismiss the regulator’s case against Finder Wallet, a subsidiary of Finder.com. The lawsuit, initiated in December 2022, accused Finder Wallet of providing financial services without holding an Australian Financial Services license.