Block Earner will launch a loan product backed by Bitcoin as collateral.

Block Earner will launch a Bitcoin-backed loan product.

Author: Tom Mitchelhill, Cointelegraph; Translation: Song Xue, LianGuai

Australian fintech company Block Earner is launching a plan for cryptocurrency-backed loan products, despite the company’s postponed court date with financial regulatory authorities for allegedly providing financial products without permission.

The new cryptocurrency loan product allows Australian cryptocurrency investors to borrow cash using cryptocurrency as collateral. Coinbase had previously offered similar services to its US customers but closed it in May of this year.

Block Earner is expected to launch its product by the end of September, initially allowing only loans with Bitcoin as collateral.

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Charlie Karaboga, co-founder of Block Earner, stated that the new loan product is designed in a “very conservative manner” with the aim of fully complying with existing licensing requirements.

In November last year, Karaboga’s company was sued by the Australian Securities and Investments Commission (ASIC), alleging that the company provided cryptocurrency-related fixed-income products without an Australian Financial Services (AFS) license.

At the time, Karaboga fiercely criticized the lack of clarity from regulatory authorities, claiming that his company had spent a lot of time and resources developing products that he believed complied with ASIC’s existing guidelines.

“Our position remains unchanged. Australia has no clear regulations.”

“Like any company in the fintech ecosystem, we sought legal advice before launching the product. We believe there is not enough regulation or enough licenses available for us to apply,” Karaboga added.

However, Charlie states that the regulatory actions against Block Earner and its competitor cryptocurrency company Finder are largely passive, likely due to the FTX crash in November.

“Unfortunately, we were affected, likely because our products were more prominent compared to other products as they were used as auxiliary products, while ours were core products.”

Despite not being affected by FTX, after ASIC took legal action, Karaboga stated that he closed the company’s “money-making” product and repaid all users.

It seems that the company has learned its lesson. James Coombes, the business director of Block Earner, said that the newly launched product will not suffer the same fate as their Earn product, as it already complies with the rules of the Australian Credit License.

“This is a core difference,” Coombes said. “For the Earn product, there is no clear guidance on whether a license is required, which is why we hold conflicting views. Whereas there is clear guidance on this point, and a license is required to offer consumer credit. So we went and got the license.”

Clarification

Looking ahead, Karaboga stated that faster regulatory progress in jurisdictions such as Singapore, Hong Kong, and the UK will force the Australian government to catch up, or else risk losing market share in the cryptocurrency industry.

“I expect that we will see a clearer picture within 12 to 18 months,”

Karaboga explained that since Australia is one of the wealthiest countries in terms of per capita GDP, and Australians are pioneers in the cryptocurrency industry, its citizens have become the main targets of scammers.

Ultimately, Karaboga asserts that domestic regulatory agencies are firmly supportive of cryptocurrencies and hope to “drive innovation” forward.

Ben Rose, the General Manager of Binance Australia, also agrees with this view. He recently stated that he believes Australian regulatory agencies will support cryptocurrencies in the long term.

On September 6th, cryptocurrency giant Coinbase listed Australia as one of its major expansion locations outside of the United States.

The federal court hearing for Block Earner is scheduled for November of this year, with a ruling expected in January 2024.

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