Australian Court Hands Win to Market Regulator in Case Against Qoin Blockchain, But There is a Catch

As an experienced financial analyst, I closely follow regulatory developments in the Australian markets. The recent ruling by the Federal Court against BPS Financial Pty Ltd (BPS) over its Qoin scheme is a significant milestone that clarifies important aspects of the regulatory landscape for blockchain-based projects in Australia.

The Australian Federal Court predominantly supported the decision of Australia’s markets regulatory body in their legal dispute with BPS Financial Pty Ltd (BPS), regarding the Qoin scheme, as documented in the court records and the regulator’s announcement on Friday.

Expert: In their Unlicensed Conduct Case against BPS, the Judge found ASIC victorious, except for the 10-month span when BPS represented PNI Financial Services Pty Ltd, which holds a non-cash payments license. ASIC brought up this duration in their arguments.

In 2022, The Australian Securities and Investments Commission (ASIC) initiated a legal action against BPS, seeking the court’s determination that the entirety of the Qoin project, including its token, blockchain, and digital wallet, constituted a financial product subject to licensing requirements.

In Australia, the Australian Securities and Investments Commission (ASIC) has experienced successes and setbacks while increasing regulatory control via court proceedings.

The ASIC’s argument in this case was that the Qoin Blockchain and the Qoin Wallets should be considered as part of a single scheme. However, the court did not concur with this perspective.

“Contrary to ASIC’s submissions, the Qoin Blockchain, a means of acquiring Qoin and a means whereby business operators who hold Qoin Wallets can register as Qoin Merchants are not components of, and are not themselves, the mechanism which allows the user to make the non-cash payment,” the order said.

As an expert analyzing this legal case, I would paraphrase it by saying that the court refused ASIC’s efforts to classify an entire blockchain as a “financial product” under Australian law.

As a researcher studying the legal landscape of blockchain technology, I’d express it this way: “I believe it’s crucial to acknowledge that blockchains serve as a fundamental technological infrastructure. If and when this technology is employed in a manner that contravenes the law, legal action is not only permissible but essential. However, it’s important to remember that the technology itself remains distinct from any potential illegal activities.”

Ask ASIC and BPS to collaborate and reach a consensus on drafting an order to address the outstanding issues, which encompasses determining penalties for the forthcoming period.