Regulator vows to continue scrutinising crypto products
The Federal Court has ruled against BPS Financial for operating without a licence – the first legal decision concerning a non-cash payment facility using crypto assets.
The court found that BPS had been providing the Qoin Wallet, which utilises a crypto-asset token named Qoin, without the necessary Australian Financial Services Licence.
Justice Kylie Downes, presiding over the case brought by the Australian Securities & Investments Commission (ASIC), determined that since January 2020—excluding a period of 10 months—BPS violated the Corporations Act by not holding a licence nor having authorisation from a licence holder.
The judgement also highlighted BPS Financial’s misleading conduct and false representations about the Qoin Wallet, particularly claims about its registration status, merchant acceptance, and the ease of exchanging Qoin tokens for other currencies or crypto assets. The only digital currency exchange accepting Qoin before November 2021 was BTX Exchange, which is affiliated with BPS and restricted exchanges among crypto assets.
ASIC chair Joe Longo emphasised the significance of the ruling for the regulation of crypto asset businesses.
“ASIC has taken a number of enforcement actions against crypto asset businesses with the intention of clarifying what is a regulated product and when the provider needs a licence,” he said.
“Crypto assets are highly volatile, inherently risky, and complex. This makes it critically important that providers have the appropriate licences and authorisations, and that investors are provided with clear and accurate information. This case is an important reminder that many crypto products are financial products and that providers need to hold a licence.
“These 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. Entities should not be making claims about features, or the regulatory status of their offerings, that are false or misleading.”
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