The Federal Court of Australia has issued a decisive verdict against BPS Financial Pty Ltd., convicting the firm of operating its “Qoin Wallet,” a cryptocurrency payment tool, without the required financial licenses. This ruling represents a pivotal step for the Australian Securities and Investments Commission (ASIC) in enforcing cryptocurrency regulations.
Unlicensed Crypto Operations Unveiled
Justice Kylie Downes determined that BPS Financial conducted unlicensed activities by failing to secure an Australian Financial Services Licence (AFSL). This license is crucial for issuing or advising on the Qoin Wallet, which employs a unique crypto-asset token named “Qoin.” The company initiated these operations in January 2020, in direct contravention of the Corporations Act.
ASIC’s Firm Stance on Crypto Regulation
ASIC Chair Joe Longo highlighted the significance of this ruling, noting it as the first court outcome involving a non-cash payment facility that uses crypto assets. “Crypto assets are highly volatile, inherently risky, and complex,” Longo remarked, stressing the importance of obtaining the proper licenses and providing clear, accurate information to investors. ASIC’s enforcement efforts aim to define regulatory requirements for crypto businesses and bolster consumer protection.
Also Read: UK Treasury Highlights Cryptocurrency Risks in New Compliance Report
Exposing Deceptive Practices and Misleading Claims
Moreover, the court found that BPS engaged in deceptive practices by falsely promoting the Qoin Wallet as registered and inaccurately claiming widespread merchant acceptance. BPS also misled consumers regarding the liquidity of Qoin tokens, falsely asserting that they could be easily converted into other cryptocurrencies or Australian dollars. Notably, the only digital currency exchange that accepted Qoin until November 2021 was the BTX Exchange, associated with BPS and not supporting exchanges between different crypto assets.
Implications for the Crypto Industry
This decision sends a stern warning to the cryptocurrency industry: adherence to regulatory standards is mandatory. The case underscores the necessity for crypto businesses to disclose accurate information about their products’ regulatory compliance and features. ASIC remains vigilant, continuing to monitor the industry to ensure the protection of consumer rights and the fulfillment of legal obligations.
This ruling underscores the ongoing challenges and scrutiny the crypto industry faces as global regulators seek to balance innovation with consumer protection and market integrity.
