Australian fintech firm Block Earner is charging ahead with plans to launch a crypto-backed loans product, despite staring down an upcoming court date with the financial regulator for allegedly offering financial products without a license.
The new crypto loan product allows Australian crypto investors to use crypto as collateral to borrow cash. Coinbase once offered a similar service to its U.S. customers but shuttered it in May this year.
The initial rollout from Block Earner is expected at the end of September and will initially only allow loans using Bitcoin as collateral.
Block Earner co-founder Charlie Karaboga told Cointelegraph that the new loan products have been designed in a “very conservative way” in a bid to fit neatly into an existing licensing model.
Australia’s 1st Crypto-Backed Loans
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Thread ⬇️ pic.twitter.com/V55z5BXfOa
— Block Earner (@blockearner) September 7, 2023
Karaboga’s firm was burned in November last year, after it was sued by the Australian Securities and Investments Commission (ASIC) for allegedly offering crypto-linked fixed-yield earning products without an Australian Financial Services (AFS) license.
At the time, Karaboga lashed out against the regulator for its lack of clarity, claiming that his firm had spent considerable time and resources building out products he believed were compliant with ASIC’s existing guidelines.
“Our position remains the same. There is no clear regulation in Australia.”
“Like any company in the fintech ecosystem, before we launched the product we got legal opinions. We think that there was no sufficient regulation, or sufficient licenses for us to apply,” Karaboga added.
However, Charlie said that the regulatory moves against Block Earner and competitor crypto company Finder were largely reactive, and likely due to the FTX crash in November.
“ASIC has commenced civil penalty proceedings in the Federal Court against fintech company Block Earner alleging it provided unlicensed financial services in relation to its crypto-asset based products…” https://t.co/MpgKojxRRG #cryptolaw
— Aaron Lane (@AMLane_au) November 23, 2022
“We were impacted, unfortunately, most likely probably because we were more visible with our product compared to others, because they were using…
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