A recent pivotal ruling by Australia’s Federal Court has highlighted significant regulatory shortcomings in the nation’s crypto and digital payment landscape. BPS Financial Pty Ltd has been fined AU$14 million for operating its Qoin wallet without the necessary financial services license and for making misleading claims about its product.
Conclusion of the BPS Legal Battle
The court’s decision concludes a lengthy legal tussle initiated by the Australian Securities and Investments Commission (ASIC). The case focused on whether BPS crossed the line from being a technology provider to a financial services operator. The court determined that BPS had indeed engaged in activities that required regulatory oversight.
While promoting and issuing the Qoin wallet as a non-cash payment facility associated with its digital token, BPS was found to have engaged in regulated behavior without possessing the proper Australian financial services license, thereby violating corporate law.
Qoin’s Regulatory Navigation
Between January 2020 and mid-2023, BPS marketed the Qoin wallet as a means for users to transact using Qoin tokens across a network of merchants. The court concluded that these actions extended beyond merely offering software—it involved creating a payment facility and providing financial services that necessitate licensing in Australia.
ASIC argued that the structure and promotion of the Qoin wallet led consumers to view it as a viable alternative to traditional payment methods. The court upheld this view, regarding the absence of a license during this time as a clear violation of Australian consumer protection laws.
Examination of Misleading Claims
The court also affirmed that BPS engaged in misleading and deceptive conduct. Previous judgments in 2024, subsequently upheld on appeal in 2025, indicated that the company made false claims regarding the status and functionality of Qoin. These claims included assurances that the product was officially approved or registered and that Qoin tokens could be easily exchanged for fiat money or other cryptocurrencies, along with claims of wide merchant acceptance.
The court determined that such assertions created a distorted impression of liquidity, acceptance, and operational capability. Following these findings, ASIC initiated civil proceedings in 2022, concluding that such claims could mislead consumers.
The Federal Court imposed total penalties of AU$14 million, including AU$1.3 million for unauthorized conduct and AU$8 million for misleading representations. It also prohibited BPS from conducting financial services without a license for ten years and required the publication of corrective notices regarding the Qoin wallet application and website, along with covering a substantial portion of ASIC’s legal costs.
Judge Downes characterized BPS’s actions as serious and illegal, noting the involvement of senior management and the inadequacies of internal compliance systems.
Widening Compliance Gap
The BPS ruling comes amid ASIC’s adjustments to parts of its cryptocurrency regulatory framework. In December, the regulator finalized exemptions aimed at simplifying the distribution of stablecoins and wrapped tokens, enabling the use of omnibus accounts with appropriate record-keeping, while removing the requirement for certain intermediaries to possess separate Australian financial services licenses.
These changes aim to reduce compliance costs for businesses operating in digital assets and payment sectors. In a report released on Tuesday titled “Key Issues Outlook 2026,” ASIC Chair Joe Longo highlighted ongoing regulatory gaps in digital assets and fintech.
The report also pointed out risks associated with opaque private credit, operational failures in superannuation, high-risk investment sales, and consumer harm related to AI.
Together, these developments suggest a regulator striving to balance flexibility with consumer protection. The BPS ruling underscores where this balance has yet to be clearly defined.
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