On 17 June 2026, the High Court of Australia delivered its unanimous judgment in ASIC v Web3 Ventures Pty Ltd [2026] HCA 21, definitively resolving the question of whether crypto-yield products fall within the definition of 'financial product' under Chapter 7 of the Corporations Act 2001 (Cth). View the available judgment.

Case background

Web3 Ventures Pty Ltd (Block Earner) operated an online platform through which it offered the "Earner Product". Under this product, a user deposited Australian dollars, nominated an amount to be invested, and Block Earner "converted" those funds into an eligible cryptocurrency. The product offered users a fixed rate of return, being a headline rate of 7% annualised percentage yield (APY), paid in the relevant cryptocurrency. Block Earner's business model involved on-lending the cryptocurrency to third parties at higher rates, retaining the margin as profit. Upon a user's withdrawal, Block Earner converted the cryptocurrency (including accrued yield) back to AUD, with the final dollar amount varying by reference to the exchange rate between AUD and the relevant crypto-asset.

Block Earner did not hold an AFSL for the Earner Product. In 2022, ASIC commenced proceedings against Block Earner alleging it provided unlicensed financial services in relation to its crypto-asset based product and that it operated an unregistered managed investment scheme.

At first instance, ASIC prevailed. Jackman J declared that Block Earner had contravened s 911A(1) and (5B) of the Corporations Act, by carrying on a financial services business without an AFSL. Jackman J found that the Earner Product was a financial product as a facility through which users made a "financial investment" under s 763B(a)(i) and (iii). His Honour also declared Block Earner contravened s 601ED(5) and (8) by operating an unregistered managed investment scheme.

On appeal to the Full Federal Court, Block Earner prevailed. The Full Court set aside Jackman J's declarations, holding that the Earner Product was not a financial product: it was not a facility through which a person makes a financial investment under s 763B because Block Earner used contributions to generate a return "for" itself, not "for" investors, distinguishing between meeting obligations to users and generating a benefit for them. The Full Court also found the product was not a managed investment scheme, and not a derivative under s 761D.

High Court's reasoning

The High Court unanimously allowed ASIC's appeal, overturning the Full Federal Court's decision. The High Court held that the Earner Product was a financial product as defined in s 763A(1)(a) because it was a facility through which a person made a financial investment within the meaning of s 763B and was also a derivative within the meaning of s 761D.

Facility through which a person made a financial investment

Under the relevant limbs of s 763B(a), an investor makes a financial investment if the investor gives money or money's worth (ie the contribution) to another person and (i) the other person uses the contribution to generate a financial return, or other benefit, for the investor, or (ii) the other person intends that the contribution will be used to generate a financial return, or other benefit, for the investor (even though no return is in fact generated).

The High Court made several critical findings against Block Earner:

• Defining the facility. The Earner Product was acquired not when AUD was deposited (as those funds could serve other products), but only when the user completed the "Acquisition Steps" which included nominating a cryptocurrency and confirming the AUD amount – at which point Block Earner converted the nominated AUD into cryptocurrency. Accordingly, the facility was defined by the contractual arrangement comprising the Terms of Use, which included the conversion process.
• The contribution was AUD, not cryptocurrency. A user gave AUD to Block Earner to acquire the Earner Product. The user never had any rights to any cryptocurrency because the conversion from AUD to the nominated cryptocurrency occurred only after the user acquired the product and all rights to the cryptocurrency lay with Block Earner – meaning users could not 'give' any cryptocurrency to Block Earner.
• Use of contribution to generate a return "for" the investor. The Court held that the APY constituted a financial return "for" users. Block Earner used the AUD contribution to generate both the APY for the user and a profit margin for itself. The Court held that in any profit-making investment business, the business uses invested funds to generate a return for both itself and its investors.
• No "nexus" requirement. The Court rejected Block Earner's argument that s 763B required the investor to have "skin in the game", being some right or interest in the downstream activities of the business of the issuer, reasoning there is nothing in the text of s 763B(a) requiring a direct nexus between the financial return and the particular endeavour in which the contribution is deployed.
• The traditional deposit account as comparator. The Court determined that the Earner Product was not a loan arrangement: the user did not lend any money to Block Earner by nominating AUD to be invested in the Earner Product; nor was the user capable of loaning any cryptocurrency. The Court observed that the Earner Product shared characteristics with an interest-bearing deposit: in both cases, the institution pools customers' funds, on-lends them to derive a return, and pays the customer a yield from that return.

Derivative

Section 764A(c) provides a derivative is a financial product. The High Court also found that the Earner Product was a derivative within the meaning of s 761D, rejecting each of Block Earner's arguments that would have excluded the product from characterisation as a derivative.

• Not excluded as a credit facility. The Court held that because the regulations define "credit facility" as the provision of credit that is "not a financial product mentioned in paragraph 763A(1)(a)", and because the Earner Product was found to fall within s 763A(1)(a), it could not simultaneously be an excluded credit facility.
• The consideration is derived from or varies by reference to the value of something else. The legal relationship was entered into upon completing the Acquisition Steps, which preceded any currency conversion. The AUD that users received back derived from or varied by reference to the cryptocurrency's market value and the USD/AUD exchange rate, making the conversion integral to the Earner Product and satisfying s 761D(1)(c).
• The "Exchange service" not a separate arrangement. The Terms of Use required conversion of AUD to cryptocurrency upon entry and reconversion upon exit, meaning the "Exchange service" was part of the Earner Product rather than a separate arrangement. Even if considered separate, the arrangements constituted a single scheme under s 761B(c), as conversion was the mechanism by which users entered and exited the Earner Product.
• Not a contract for the future provision of services. The s 761D(3)(b) exception requires an assessment of the substance of the contract – focusing on its purpose or object – rather than on services merely incidental to that purpose. Here, the substance of the arrangement was the provision of a return in AUD linked to the value of a cryptocurrency; the exchange or conversion steps were incidental mechanisms, not the object of the contract. Accordingly, the Earner Product was not a contract for the future provision of services.

Outside the High Court's scope

The High Court's decision turned on specific features of the Earner Product: the user gave AUD to a centralised intermediary, the intermediary deployed those funds to generate a return, the user received a yield, and the AUD amount on exit varied by reference to a crypto-asset's value. Products that lack one or more of these features – particularly those where the user retains custody, interacts directly with decentralised protocols, or acquires a token for consumption rather than yield – may fall outside the reasoning in this judgment, though each would require careful assessment on its own terms.

ASIC also did not appeal the Full Court's rejection of Block Earner operating an unregistered managed investment scheme, so the question of whether a crypto-yield product can be a managed investment scheme remains open.

Finally, the penalty question was remitted to the Full Court, so the consequences of the contravention are yet to be determined.

Practical implications for financial institutions

The judgment carries significant implications for any bank or authorised deposit-taking institution considering crypto-linked products:

• Broad reach of "financial product" classification. The Court reaffirmed that Chapter 7's definitional framework is deliberately overinclusive, employing criteria that "reflect fluid market and economic usage rather than any ascertainable and stable meaning in the law". Products offering a fixed yield funded by on-lending or deploying digital assets – regardless of the labels applied – will likely be caught.
• Labels are immaterial. The Court found that labels such as "Lend", "loan" and assertions that users held "rights and title" to cryptocurrency were inapposite and did not reflect the true legal character of the arrangement. Product structuring that relies on nomenclature rather than substance will not withstand regulatory scrutiny.
• Dual classification risk. A single product may simultaneously satisfy the general definition (financial investment) and fall within a specific inclusion (derivative), creating compounding obligations under Chapter 7 relating to licensing, disclosure, and conduct.
• Single economic arrangement. For financial institutions considering multi-contract product architectures, artificially disaggregating a product into separate agreements – such as separate terms for exchange and yield services – will not defeat classification as a single financial product where the components are economically interdependent and form part of a single scheme.
• Exchange-rate exposure equals derivative exposure. Any product where the ultimate AUD return varies by reference to the value of a crypto-asset or an exchange rate may constitute a derivative, triggering a separate compliance stream. Financial institutions should assess whether any crypto-linked yield products carry embedded derivative characteristics that require additional authorisations.