Sydney – The Australian Securities and Investments Commission (ASIC) has recently filed an application with the Federal High Court, requesting an authoritative interpretation of the legal nature and regulatory application of crypto asset income products. This move is regarded as a key measure by the country to address the regulatory ambiguity in the cryptocurrency industry and may provide a national benchmark for the legal characterization of similar financial products.
The core of the dispute: Whether income products constitute “financial products”
This dispute originated from ASIC’s enforcement actions against two crypto enterprises. Regulatory authorities have alleged that the “Bitcoin pledge interest generation” service provided by a certain platform to users (with an annualized yield of approximately 8%) essentially constitutes a “financial product” as defined by the Company Law of 2001, but the relevant enterprise failed to apply for a financial service license as required.
In the legal documents submitted to the High Court, ASIC explicitly put forward two major points of contention:
Does the income calculation method of crypto asset income products (such as automatic distribution based on blockchain protocols) constitute “investment management services”?
Does the “expected return” promised by the platform to users fall under the “benefit of financial products” as defined by law?
Industry response: Compliance pressure and innovation concerns coexist
The cryptocurrency industry has responded differently to this. The founder of Compliance Technology Company pointed out: “If the High Court determines that such products are financial products, it means that the entire industry needs to be included in the ASIC regulatory framework, and the compliance cost will increase significantly.” Currently, approximately 37% of crypto platforms in Australia offer similar revenue services, with a user base exceeding 500,000.
However, some developers of decentralized finance (DeFi) projects are concerned that strict regulation might curb innovation. The Open Source Protocol team issued a statement saying: “Automated revenue distribution is a core feature of blockchain technology. If incorporated into the traditional financial regulatory system, it will disrupt the decentralized nature of DeFi.”
Legal perspective: Challenges to the applicability of the existing framework
A professor of commercial law at the University of Sydney analyzed and pointed out that the current financial regulatory system in Australia is based on a regulatory logic of “product functions” rather than “technical attributes”. She said, “The key issue lies in whether crypto income products essentially undertake the risk allocation function of traditional financial products, rather than whether their underlying technology is blockchain.”
Partner of the law firm added that if the High Court makes an expanded interpretation, it may trigger a “ripple effect” – the legal characterization of other new fintech products (such as algorithmic trading robots and decentralized lending protocols) will also face a re-examination.
Regulatory trend: Global crypto legislation is accelerating its tightening
This controversy comes against the backdrop of the global strengthening of crypto regulation. The EU’s “Crypto Asset Markets Regulation” (MiCA) came into effect in April this year, explicitly requiring income-generating crypto products to be regulated under “collective investment schemes”. Recently, the US SEC has also intensified its enforcement efforts against crypto lending platforms, successively suing enterprises such as.
The president of ASIC emphasized in the statement: “Regulatory clarity is key to protecting investors and maintaining market integrity.” We expect the High Court to provide clear legal guidance for the rapidly evolving crypto market.
Case progress and impact outlook
The High Court is expected to hear this case in the third quarter of 2025. If the ruling supports ASIC’s position, the Australian crypto industry will face large-scale compliance rectifications, and some small and medium-sized platforms may exit the market due to excessively high compliance costs. Conversely, if the court makes a restrictive interpretation, it may leave more regulatory blind spots for innovative models such as DeFi.
Australia is one of the countries with a relatively high penetration rate of cryptocurrencies globally, with on-chain transaction volume reaching billion Australian dollars in 2024. This judicial ruling will not only affect the domestic market, but also may provide precedent references for Commonwealth countries and jurisdictions that adopt a similar common law system.
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