High Court to clarify legal definitions for digital assets

The High Court of Australia has granted the Australian Securities and Investments Commission (ASIC) special leave to appeal regarding the interpretation of statutory definitions related to a discontinued Block Earner product.

Legal definitions under scrutiny

The court's decision centres on the question of whether terms such as 'financial product' and 'derivative', as set out in Chapter 7 of the Corporations Act 2001 (Cth), apply to a Block Earner product that is no longer available to customers. This issue follows a series of legal proceedings concerning the classification of Block Earner's Earner product, which the company previously offered and later discontinued.

The special leave was granted on the condition that ASIC undertakes to pay Block Earner's costs for the appeal process. ASIC now has 14 days to file a formal notice of appeal with the High Court. The timeline for the hearing has not been set, though expectations are that it will occur in the first half of 2026.

Previous court findings

In April 2025, the Full Federal Court determined that the Earner product did not constitute a financial product, a derivative, or a managed investment scheme under the law. The court found no breach of legislation, reported that no customer harm occurred, and ordered ASIC to pay Block Earner's legal costs in that instance.

In light of the Full Court ruling, the outcome of the High Court appeal remains uncertain until a final judicial decision is delivered. The appeal will require detailed legal arguments on the interpretation of key statutory definitions central to the regulation of digital financial products in Australia.

Block Earner's response

"We respect the High Court's decision to grant special leave and welcome the condition that ASIC pay costs related to the appeal. Clear regulations matter, and we hope this approach helps ensure important legal questions can be tested without placing disproportionate burdens on private companies such as Block Earner."

Block Earner expressed the view that the appeal could play a constructive role in the development of Australia's legal and regulatory framework governing digital assets.

"Constructive engagement between regulators, innovators and the courts is essential to providing clear rules in a fast-changing environment," Mr Karaboga said. "We remain confident in the Full Court's judgment and committed to a responsible and transparent approach to financial services."

Ongoing operations

The company has stated that, while the legal process continues, its operations as a registered Digital Currency Exchange and Independent Remittance Provider with AUSTRAC will proceed. Block Earner remains an authorised Australian Credit Licence Representative and intends to continue providing its crypto-backed products and services in accordance with all applicable Australian regulations.

The High Court's review is expected to set an important precedent for how digital asset products are categorised and regulated nationwide, with potential implications for both industry participants and regulatory bodies as Australia's digital financial sector continues to evolve.