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When Is a Crypto Token a "Financial Product"? Chapter 7, Corporations Act 2001 (Cth)

The first question for any Australian digital asset project: is your token a financial product under s 763A of the Corporations Act?

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The first question for any Australian digital asset project: is your token a financial product under s 763A of the Corporations Act?

If yes: an AFSL (or an exemption) is generally required, Chapter 7 disclosure can apply, and ASIC has full jurisdiction. If no: Chapter 7 does not apply, but the Australian Consumer Law and, if you provide virtual asset services, the AML/CTF Act may still apply.

Three pathways to 'financial product' (s 763A):

  1. Financial investment (s 763B): contributes value, the contribution is used (or intended) to generate a return, no day-to-day control
  2. Manages financial risk (s 763C): for example insurance or hedging. (Derivatives are separately listed as financial products: s 764A(1)(c), s 761D.)
  3. Non-cash payment (s 763D): payment or settlement functionality

ASIC position (INFO 225): Substance over label. Calling it 'utility' does not override economic reality.

  1. The Core Question

Whether a token is a financial product is still decided under the existing Chapter 7 definitions. Separately, the Corporations Amendment (Digital Assets Framework) Act 2026 (No. 38 of 2026) brings digital asset platforms and tokenised custody platforms into AFS licensing from 8 April 2027. It does not replace the token-by-token question below. The question is still: does the token, or the arrangement around it, fall within one of the statutory categories in Part 7.1 Division 3?

If yes: a person who carries on a financial services business in Australia (for example dealing, advising or making a market) generally needs an AFS licence or an exemption. Breach is an offence (s 911A(1); s 1311(1)) and a civil penalty contravention (s 911A(5B)).

Where the ASIC no-action position stands. ASIC's class no-action position for digital asset businesses required firms to lodge an AFS licence application, or make another qualifying arrangement, by 30 September 2026. That window has closed. Firms that qualified stay covered until ASIC decides their application. The position never applied to crypto lending or earn products. We have not found a successor no-action position.

  1. Statutory Framework: s 763A and the Category Approach

Section 763A provides the umbrella definition. A "financial product" is a facility through which a person:

  1. Makes a financial investment (s 763B)
  2. Manages financial risk (s 763C)
  3. Makes non-cash payments (s 763D)

A crypto token is assessed against each limb. There is no "crypto exemption."

2.1 Financial Investment (s 763B): the main limb for tokens

A person makes a financial investment if:

(a) they give money or money's worth (the contribution) to another person, and any of these apply: the other person uses the contribution to generate a financial return or other benefit for the investor; the investor intends that it will be used that way; or the other person intends that it will be used that way (even if no return is in fact generated); and (b) the investor has no day-to-day control over the use of the contribution to generate the return or benefit.

When tokens trigger this:

  • Token presales where funds are used to build a platform: contribution, intended return (e.g. expected appreciation), no control
  • Yield/earn products: deposit tokens, receive a return, no control (Block Earner [2026] HCA 21; compare Finder Earn, which was held not to be a debenture)
  • Staking-as-a-service: ASIC's INFO 225 (Example 4) treats certain managed staking facilities as likely to be facilities for making a financial investment and potentially managed investment schemes
  • Governance tokens alone: likely not, unless bundled with revenue share or yield expectations. INFO 225 says the ability to vote on matters is not enough to give a person day-to-day control

2.2 Managing Financial Risk (s 763C): derivatives

Derivatives are listed specifically (s 764A(1)(c)). A derivative is an arrangement where consideration is provided at a future time and the amount varies by reference to the value of something else (s 761D). This captures:

  • Crypto CFDs: generally derivatives (s 761D)
  • Crypto futures/options: derivatives
  • Margin trading products: may be derivatives or another financial product, depending on their terms. In ASIC v Bit Trade Pty Ltd [2024] FCA 953, a crypto margin extension product was held to be a credit facility. Credit facilities are excluded from the Corporations Act definition of financial product (s 765A(1)(h)(i)), but the design and distribution obligations still applied because Part 7.8A also covers ASIC Act financial products (s 994AA)
  • Synthetic tokens pegged to real-world assets
  • Wrapped tokens: INFO 225 says many wrapped tokens are likely to be derivatives. ASIC has granted class relief for distributors of certain eligible stablecoins and wrapped tokens

2.3 Non-Cash Payment Facility (s 763D)

A token used to make payments (not investment) may fall here. INFO 225 says certain stablecoins are likely to be non-cash payment facilities. This is less commonly triggered for speculative tokens.

  1. Specific Product Categories

Beyond the functional test, tokens can also be captured as specific product types (mostly listed in s 764A; the non-cash payment row is the s 763D functional limb, included for comparison):

Product TypeStatutory SectionCrypto Application
Securitiess 764A(1)(a); s 92(5)Token = share/debenture if it confers equity/debt rights in an entity
Managed Investment Scheme (MIS)s 9, s 764A(1)(b) and (ba), s 601EDPooled or common-enterprise contributions, members lack day-to-day control (a common hook for crypto)
Derivativess 761D, s 764A(1)(c)Value derived from an underlying asset: CFDs, options, futures on crypto
Debenturess 9Undertaking to repay money deposited or lent. Finder Earn held not a debenture (Finder Wallet [2024] FCA 228; [2025] FCAFC 93)
Non-cash payment facilitys 763DPayment tokens, certain stablecoins
  1. The Key Australian Cases (2022 to 2026)

ASIC v Web3 Ventures Pty Ltd (Block Earner) [2026] HCA 21 (17 June 2026)

  • Product: "Earner" (users deposit crypto, receive a fixed yield)
  • History: At first instance the Federal Court found Block Earner had engaged in unlicensed financial services conduct and operated an unregistered managed investment scheme ([2024] FCA 64), but relieved it from a penalty ([2024] FCA 578). In 2025 the Full Court overturned the findings that Earner was a financial product and a managed investment scheme ([2025] FCAFC 58).
  • Held: On 17 June 2026 the High Court ruled for ASIC 7-0. The Earner product was a financial product: a facility for making a financial investment, and a derivative. The High Court did not revive the first-instance managed investment scheme finding. ASIC said the matter would return to the Full Court for ASIC's appeal against the penalty judgment (26-124MR).
  • Principle: Fixed-yield crypto products are likely to be financial products, whatever they are called. ASIC's media release notes the High Court said it was enough that funds were used, or intended to be used, to generate a return for both the investor and the issuer.

ASIC v Finder Wallet Pty Ltd [2024] FCA 228

  • Product: "Earn" (deposit crypto, receive a return)
  • Held: Not a debenture. ASIC's appeal was dismissed (ASIC v Wallet Ventures Pty Ltd [2025] FCAFC 93, 24 July 2025). Customers transferred a stablecoin (TrueAUD), which the Full Court treated as property, so the arrangement was not a deposit or loan of money.
  • Principle: The debenture definition has limits. Small differences in product terms can change the result. Finder was decided on the debenture point only. Block Earner shows the same kind of product can still be caught under s 763B.

ASIC v Bit Trade Pty Ltd [2024] FCA 953

  • Product: Margin extension product offered by Bit Trade on its crypto exchange
  • Held: A credit facility. Bit Trade breached the design and distribution obligations by offering it to retail clients without a target market determination. The court later ordered an $8 million penalty ([2024] FCA 1422).
  • Principle: Margin products on a crypto exchange bring financial services obligations, including the design and distribution obligations.

ASIC v BPS Financial Pty Ltd [2024] FCA 457; [2025] FCAFC 74

  • Product: Qoin wallet and Qoin token
  • Point: The Court found the Qoin Wallet was a non-cash payment facility, and that BPS engaged in unlicensed and misleading conduct, except for the 10 months it was an authorised representative of a licensee. The Full Court reversed that exception: BPS issued the wallet on its own behalf, so it needed its own AFS licence ([2025] FCAFC 74).

Managed investment scheme: s 9 definition and s 601ED registration

  • The elements: (1) people contribute money or money's worth to acquire rights to benefits produced by the scheme, (2) contributions are pooled or used in a common enterprise to produce financial benefits for members, and (3) members do not have day-to-day control over the operation of the scheme (whether or not they can be consulted or give directions).
  1. The Decision Tree
Is the token itself a security (share, debenture, debt)?
  └─ Yes -> Financial product (s 764A)
  └─ No ↓

Does the arrangement involve pooled funds, a common enterprise,
and the user lacks day-to-day control? (MIS test)
  └─ Yes -> Managed Investment Scheme -> Financial product
  └─ No ↓

Is the user's contribution used (or intended) to generate a
return, with no day-to-day control? (s 763B)
  └─ Yes -> Facility for making a financial investment
  └─ No ↓

Does the product's value derive from an underlying asset?
(CFDs, margin, futures, synthetic, many wrapped tokens)
  └─ Yes -> Derivative -> Financial product
  └─ No ↓

Is the token used to make payments (not investment)?
  └─ Yes -> Possibly non-cash payment facility
  └─ No ↓

Pure utility token with no financial return expectation,
no pooling, no derivative characteristics
  └─ Probably NOT a financial product (but ASIC may still
     look at the substance)
  1. ASIC's Regulatory Posture

ASIC has been clear: substance over form. INFO 225 (Digital assets: Financial products and services) says: "The rights and benefits attached to digital assets, or products involving digital assets, are a key consideration in assessing the legal status of those digital assets and products." It adds that a reference to the legal status of a "token" "should generally be understood as a reference to the legal status of the overall arrangement that includes the token as offered to the public."

ASIC describes the financial product definition as broad and technology-neutral. After the High Court's Block Earner decision, ASIC said this "reinforces ASIC's long-standing position that the definition of financial product is broad and technology neutral". The label "utility token" or "governance token" does not decide the question. The economic substance does.

  1. The ASIC / AUSTRAC Overlap

A crypto token business can simultaneously be:

  • Dealing in a financial product under Chapter 7 (requiring an AFSL from ASIC); and
  • Subject to AML/CTF obligations under the AML/CTF Act (if it provides virtual asset services, requiring enrolment with AUSTRAC and registration on the Virtual Asset Service Provider Register: ss 51B, 76A, 76B)

Many crypto businesses carry both sets of obligations.

  1. Bottom Line
Token TypeLikely ClassificationKey Case/Authority
Yield/earn productsFinancial investment facility or derivativeBlock Earner [2026] HCA 21; Finder Earn held not a debenture
Token presales (SAFT/SAFE)Possibly an MIS or other financial product, depending on the rights attacheds 763B + s 9 MIS definition; INFO 225
Margin/leveraged tradingCredit facility or derivative, depending on termsBit Trade [2024] FCA 953 (credit facility)
CFDs over cryptoDerivatives 761D
Stablecoins (payment use)Possibly non-cash payment facilitys 763D (found in BPS Financial [2024] FCA 457 for the Qoin Wallet); INFO 225
Wrapped tokensOften a derivativeINFO 225
Pure governance tokensProbably not (unless yield)No AU case directly on point
Utility tokens (genuinely consumable)Probably not, but substance over formINFO 225

The short version: if holders expect a financial return and don't control how their contribution is used, the token is very likely a financial product. The High Court's Block Earner decision confirms how wide the definitions are, and ASIC has shown it will litigate.

This is general information, not legal advice.

Questions? Email [email protected].

Sources