The Australian Securities and Investments Commission (ASIC) has lodged an appeal against a federal court decision favoring Finder Wallet, challenging the judge’s interpretation of financial regulations regarding the company’s “Earn” product. This move underscores ASIC’s ongoing efforts to assert its regulatory stance on financial products within Australia’s burgeoning fintech landscape.
The Heart of the Dispute
At the center of this legal battle is Finder Wallet’s yield-bearing product, Finder Earn, which was previously deemed compliant with Australian financial laws by Federal Court Judge Brigitte Markovic in March. ASIC’s contention revolves around the product’s operational framework, arguing it lacked the necessary license or authorization, posing potential risks to consumer protections.
Judge Markovic’s ruling concluded that Finder Earn did not constitute a “debenture” under the Corporations Act, primarily because it did not involve the depositing of money or a loan to Finder Wallet by an investor. ASIC’s appeal, filed on April 10, contests this interpretation, suggesting that the court “erred” in its judgment.
ASIC’s Stance and Consumer Protections
ASIC’s decision to appeal emphasizes its concerns over the Finder Earn product’s operation without the appropriate licensing, potentially bypassing critical consumer protection measures embedded in financial regulations. “ASIC has appealed this decision because it is concerned that the Finder Earn product was offered without the appropriate licence or authorisation and therefore without the benefit of important consumer protections,” the regulator stated.
The Road Ahead
The appeal is set to be heard by the Full Federal Court, a higher authority that reviews cases deemed of “sufficient importance.” This forthcoming legal review will further scrutinize the regulatory implications of fintech products like Finder Earn and their compliance with Australia’s financial laws.
Finder’s Response and Product Background
Finder Wallet has expressed disappointment over ASIC’s decision not to accept the initial Federal Court ruling but remains committed to defending its product in court. Finder Earn, which operated between February and November 2022, allowed users to convert Australian dollars into the TrueAUD (TAUD) stablecoin and earn yields between 4-6%. Although the product was discontinued in November 2022, Finder Wallet maintains that the decision was a strategic business move rather than a response to regulatory scrutiny.
Implications for Australia’s Fintech Sector
This legal challenge highlights the complexities and evolving nature of financial regulations in the face of innovative fintech products. The outcome of ASIC’s appeal against Finder Wallet could set a precedent for how similar products are regulated and protected under Australian law, impacting the broader fintech industry and its approach to offering financial services.
