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Source: Сointеlеgrаph

The CEO of fintech firm Block Earner has criticized a “lack of clarity” in Australia’s financial licensing regime after the country’s financial services regulator sued his company for providing unlicensed cryptocurrency-based investment products.

The Australian Securities and Investments Commission (ASIC) announced on November 23 local time that it had filed a civil lawsuit against the company because it offered three cryptocurrency-pegged fixed income products without an Australian Financial Services (AFS) license.

ASIC said the products had to be licensed as they were “managed investment schemes” where investors contribute money that is pooled together to receive a stake in the scheme.

Products called “Crypto Earner”, “USD Earner” and “Gold Earner” offered income from users depositing Australian dollars to be converted into Bitcoin (BTC), Ether (ETH), United States Dollar Coins (USDC) or PAX Gold ( PAXG) depending on the product according to the Block Earner website.

The cryptoassets are then lent to borrowers through decentralized finance (DeFi) protocols Aave (AAVE) and Compound Finance (COMP) to generate product revenue.

ASIC Vice Chair Sarah Court expressed concern that Block Earner is offering products without “proper registration” or an AFS license, which she claims leaves “consumers without important protection,” adding:

“The fact that a product depends on a crypto asset does not mean that it is not subject to the financial services law.”

An emailed statement to Block Earner CEO and co-founder Charlie Karaboga said the firm “[understands] background” it was “a disappointing result”.

He said he welcomed the rules, saying the firm “has spent significant resources building up a regulatory infrastructure” to be able to offer services “in line with existing guidance provided by ASIC.”

Related: FTX Australia license suspended as 30k Australians left in distress

Karaboga drew attention to the unclear regulatory environment for cryptocurrencies in the country and said that “the lack of clarity […] creates friction between regulators and innovators,” adding:

“In an ideal world, we would build these products in a regulatory sandbox with more clarity about licensing regimes. In the future, we look forward to working with ASIC and other regulators in this area.”

Block Earner has applied for a loan license and has told ASIC that it will apply for an AFS license for its future products because “licensing requirements are clear,” Karaboga said.

Previously, ASIC issued a warning to crypto asset providers in the country after taking action against the creators of the Qoin token.

He stated that his “key priority” is targeting “unlicensed behavior and misleading promotion of financial products with cryptoassets” after he stated that Qoin token creators are “misleading” their users.

Source: Сointеlеgrаph

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