Overview of the Ruling
On July 24, 2025, the Full Federal Court of Australia reached a pivotal ruling in the case of ASIC v Wallet Ventures Pty Ltd [2025] FCAFC 93, which scrutinized the regulatory classification of cryptocurrency products. The Australian Securities and Investments Commission (ASIC) had appealed against an earlier ruling, but the court ultimately sided with Wallet Ventures, determining that their product, “Finder Earn,” does not qualify as a debenture under the Corporations Act 2001 (Cth). This decision spares Finder Wallet from the need to obtain a financial product license.
Background of the Case
The origins of this case can be traced back to the operations of Finder Wallet, which introduced “Finder Earn,” allowing users to convert their Australian dollars (AUD) into TrueAUD, a stablecoin, and invest it for a guaranteed return over a defined period. In this arrangement, Finder Wallet retained legal ownership of the digital currency, while users possessed a right to reclaim their initial capital plus any earned yield.
ASIC’s Arguments and Court’s Decision
ASIC’s case was premised on the assertion that this arrangement constituted a debenture, an investment requiring a license, as the principles governing the Corporations Act define a debenture as involving a loan or deposit contingent upon the return of funds. The regulator initiated legal action against Finder Wallet in 2022, but the trial court ruled against ASIC in 2024, prompting the agency’s appeal, which was ultimately defeated in the recent ruling.
In its unanimous decision, the Full Federal Court, composed of Justices Stewart, Cheeseman, and Meagher, validated the trial court’s stance. The judges highlighted that users did not lend or deposit their money with Finder Wallet; instead, they gained an ownership stake in TrueAUD.
The court stressed that Finder’s obligation to provide returns constituted a commitment to return an equivalent portion of the digital asset rather than a standard debt repayment, thereby exempting them from being categorized as a debenture as per section 9 of the Act.
Additionally, the court dismissed ASIC’s assertion that the entire setup could be categorized as a “single scheme” under section 761B of the Corporations Act, which would necessitate compliance with financial services licensing. The judges noted that the product’s presentation and organization did not align with the criteria that would warrant this classification.
Implications of the Ruling
This ruling marks ASIC’s second significant defeat related to digital asset yield products, following their unsuccessful case against Block Earner, raising critical considerations about the regulatory treatment of innovative crypto business structures that offer yields akin to investments without defining them as debt.
In response to the verdict, ASIC acknowledged the ruling and indicated they are evaluating its implications on their guidelines, particularly regarding Information Sheet 225 (INFO 225), which elucidates when cryptocurrency might classify as financial products under Australian law.
The decision underscores the necessity for businesses to carefully design their digital asset offerings, especially concerning ownership rights and contractual obligations, to steer clear of potential misinterpretations related to implied debt. While firms involved in stablecoin-based yield services could find reassurance in this ruling, it is crucial they avoid framing their service terms in a manner that suggests debt-like relationships or creates pooled investment schemes that might attract licensing scrutiny.
Conclusion
The clarification provided by the Full Federal Court in this case is significant, delineating the distinct lines between digital asset property arrangements and traditional debt instruments, thereby informing the growing number of businesses engaged in Australia’s dynamic crypto space. As the regulatory landscape for cryptocurrencies evolves, firms must remain vigilant in evaluating whether their offerings could be deemed financial products or debentures, advocating for early legal assessments. Legal experts from Kelman PLLC continue to observe developments across jurisdictions, offering guidance for clients navigating these complex regulatory waters. For further information or to discuss your specific situation, please reach out to us directly.
This analysis was initially published by Kelman.law.
