The Federal Court found BPS Financial Pty Ltd (BPS) unlicensed for offering the ‘Qoin Wallet’, a non-cash payment facility using the crypto-asset token ‘Qoin.’ In the proceeding, ASIC alleged that BPS violated the Corporations Act because it did not hold an Australian Financial Services Licence or be authorised by a licence holder to issue or provide financial advice about the Qoin Wallet. 

Justice Downes found BPS misrepresented the Qoin Wallet and engaged in misleading or deceptive conduct. The Qoin Wallet incorrectly claimed to be registered or approved, used to purchase goods and services from more merchants, and allowed consumers to exchange Qoin tokens for other crypto-assets or currency like Australian dollars through independent exchanges. The Court found BTX Exchange, which was not independent of BPS and did not allow crypto asset exchange, was the only digital currency exchange that accepted Qoin before November 2021. 

This was a significant ruling as the first court outcome against a crypto-based non-cash payment facility. ASIC has taken several enforcement actions against crypto asset businesses to clarify what is a regulated product and when a provider needs a licence. 

Cryptocurrencies are volatile, risky, and complex. This is why providers must have the right licences and investors need clear, accurate information. This case reminds that many crypto products are financial products and require licences. The Court has ordered the parties to confer on directions for a later 2024 hearing to determine the remaining questions in the proceeding, including penalties.

These proceedings should send a message to the crypto industry that ASIC will continue to scrutinise their products to protect consumers and ensure regulatory compliance. False or misleading claims about features or regulatory status are unacceptable.