Australian fintech firm Block Earner is moving forward with its plans to launch a crypto-backed loans product, despite facing an upcoming court date with the financial regulator over alleged unlicensed financial product offerings.
This new crypto loan offering allows Australian crypto investors to leverage their digital assets as collateral for cash loans.
Similarly, SALT, a lending platform based in Colorado, provides crypto-backed loans to U.S. clients, while Coinbase previously offered a similar service to its U.S. customers before discontinuing it in May this year.
Block Earner’s initial rollout of this crypto loan product is slated for the end of September, initially supporting loans using Bitcoin as collateral.
The co-founder of Block Earner, Charlie Karaboga, has emphasized that these loan products have been meticulously designed to align with existing licensing models in a cautious manner.
Karaboga’s firm faced legal troubles last November when it was sued by the Australian Securities and Investments Commission for allegedly offering crypto-linked fixed-yield earning products without an Australian Financial Services (AFS) license.
At that time, Karaboga criticized the regulator for its lack of clarity and asserted that Block Earner had diligently developed products in line with ASIC’s guidelines.
Karaboga explained that Block Earner’s regulatory challenges and actions against competitor Finder appeared to be reactionary, possibly linked to the collapse of FTX in November.
However, Block Earner decided to close its “earn” products and refund all users in response to ASIC’s legal actions.
Learning from past experiences, James Coombes, the head of business at Block Earner, stated that the new product launch had already obtained the necessary Australian credit license, distinguishing it from the earlier “Earn” product.
Looking ahead, Karaboga anticipates that rapid regulatory advancements in jurisdictions like Singapore, Hong Kong, and the United Kingdom will compel the Australian government to keep pace or risk losing its share of the crypto enterprise market.
He expects increased regulatory clarity in the next 12 to 18 months.
Karaboga emphasized that Australia’s high per-capita GDP and its early adoption of crypto technology have made its citizens prime targets for scammers.
Nonetheless, he believes that domestic regulators are pro-crypto and inclined to support innovation in the industry.
Binance Australia General Manager Ben Rose shares this view, expressing confidence that Australian regulators will favor crypto in the long run.
Furthermore, Coinbase’s recent listing of Australia as a primary expansion location outside the U.S. underscores the country’s growing significance in the crypto space.
Block Earner’s Federal Court hearing is scheduled for November, with a decision expected by January.