Regulator Prevails in Australian Federal Court Case Against BPS Financial
The Australian Federal Court has issued a ruling that largely favors the Australian Securities and Investments Commission (ASIC) in its case against BPS Financial Pty Ltd (BPS) regarding the Qoin scheme. Judge J Downes concluded that ASIC was successful in its Unlicensed Conduct Case against BPS, as stated in court documents. However, the ruling does not cover the period when BPS operated as an authorized representative of PNI Financial Services Pty Ltd, which holds a non-cash payments license. This authorized representation lasted for 10 months, according to ASIC.
The legal battle between ASIC and BPS began in 2022 when ASIC filed a lawsuit seeking a court ruling that the entire Qoin project, including the token, blockchain, and wallet, should be classified as a financial product requiring a license. ASIC argued that the Qoin Blockchain and Qoin Wallets were part of a single scheme. However, the court disagreed with this assertion.
The court order clarified that the Qoin Blockchain, the process of acquiring Qoin, and the registration of business operators as Qoin Merchants were not components of the mechanism for non-cash payments. This rejection by the court is significant because it recognizes blockchains as foundational technology, separate from their legal implications.
Following the ruling, ASIC and BPS have been instructed to negotiate and reach an agreement on the remaining issues, including the assessment of penalties, which is scheduled for later this month.
Australia has been closely scrutinizing the crypto industry. Binance Australia informed customers last year that they would no longer have access to Australian dollar deposits and withdrawals due to a decision by their third-party service provider. In July, ASIC officials conducted searches at Binance Australia’s offices. Additionally, the Australian Prudential Regulation Authority (APRA) instructed banks in March to report their exposures to crypto firms and startups following the collapse of Silicon Valley Bank. To address the increasing restrictions on crypto payments, Blockchain Australia has launched initiatives to combat crypto scams and frauds.
The Australian government has also proposed subjecting digital asset platforms to the same laws that govern other financial services providers. Under this proposal, crypto platform operators would need to obtain a financial services license and undergo continuous monitoring and routine audits of customer funds.
Overall, the ruling in favor of ASIC in the BPS case highlights the ongoing regulatory scrutiny of the crypto industry in Australia.
