Saturday, September 30, 2023

Block Earner introduces its new cryptocurrency-backed lending product for the Australian market

The Australian fintech company Block Earner is moving forward with its plans to launch a cryptocurrency-backed lending product despite facing a court date with the financial regulator over its alleged offering of unlicensed financial products.

The new cryptocurrency lending product allows Australian crypto investors to use cryptocurrencies as collateral to borrow cash. Similarly, a Colorado-based lending platform called SALT offers cryptocurrency-backed loans to US customers. Major crypto exchange Coinbase once offered a similar service to its US customers, but shut it down in May this year.

The first use of Block Earner is planned for the end of September and will initially only enable loans with Bitcoin as security.

Charlie Karaboga, co-founder of Block Earner, told Cointelegraph The new credit products were designed “very conservatively” in order to fit seamlessly into an existing licensing model.

Karaboga’s firm was sued by the Australian Securities and Investments Commission last November for allegedly offering fixed income products linked to cryptocurrencies without a license. of Australian Financial Services (AFS).

At the time, Karaboga criticized the regulator for a lack of clarity. He claimed his company had invested significant time and resources into developing products that he said complied with current ASIC guidelines.

“Our position remains the same. “There is no clear regulation in Australia.”

“Like every company in the fintech ecosystem, we seek legal opinions before launching the product. “We believe there was neither enough regulation nor enough licenses to apply for them,” Karaboga added.

However, Charlie said the regulatory action against Block Earner and rival crypto firm Finder was largely reactive and likely stemmed from FTX’s collapse in November.

“Unfortunately, we were most likely affected because we were more visible with our product compared to others because they used it as an auxiliary product while we used it as the main product.”

Although we are not affected by the consequences of FTX, As part of ASIC’s legal action, Karaboga said it had discontinued the company’s “profit” products and returned money to all users.

The company seems to have learned its lesson. James Coombes, managing director at Block Earner, said the new launch would not suffer the same fate as the Earn product because it already complied with the rules of an Australian lending license.

“There is a fundamental difference,” says Coombes. “In the case of the Earn product, there was no clear guidance as to whether a license was required or not and therefore we take a conflicting view. Instead In this case, the clear guidance is that a license is required to grant consumer credit. So we went and got the license.”

Hoping for clarity

look into the future, Karaboga says faster regulatory progress in jurisdictions such as Singapore, Hong Kong and the United Kingdom will put pressure on the Australian government to catch up or risk losing market share to crypto companies.

“I hope we will see more clarity within 12 to 18 months.”

Karaboga explained Since Australia is one of the richest countries in terms of GDP per capita and Australians were “newbies” to the cryptocurrency industry, its citizens had become prime targets for scammers.

Finally, Karaboga explained that national regulators are strongly in favor of cryptocurrencies and want to “drive innovation.”

Binance Australia CEO Ben Rose echoed this sentiment, recently telling Cointelegraph he was confident Australian regulators would be on the side of cryptocurrencies in the long term.

On September 6th Coinbase listed Australia as one of its top locations for expansion outside the US.

Block Earner’s trial in federal court is scheduled for November of this year, with a decision expected in January.

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Nation World News Desk
Nation World News Desk
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