Earlier this month, the Federal Court delivered a significant judgment in the case of Australian Securities and Investments Commission v BPS Financial Pty Ltd [2024] FCA 457. This case sets milestones for Australian businesses in the crypto and fintech space. It is particularly important for those dealing with non-cash payment (NCP) facilities. This article explains the key aspects of the judgment and its implications for the crypto and fintech industry in Australia.
The Case
The case revolved around the Qoin ecosystem. Through the Qoin Wallet App, a user could create a Qoin Wallet. The Qoin Wallet interacts with the Qoin Blockchain, recording all transactions involving Qoin, the token within the Qoin ecosystem.
This case stands significant as:
- ASIC has achieved its first ‘win’ against an NCP facility involving crypto;
- the court provided guidance on what constitutes a crypto NCP facility; and
- the court gave guidance for the first time on the words ‘on behalf of’ in the Corporations Act.
What Was the NCP Facility?
Justice Downes ruled that the NCP facility, and therefore the ‘financial product’, only included the Qoin Wallet. It did not cover the broader ecosystem components like the Qoin tokens or the Qoin Blockchain. Her honour explained that even if a financial product requires integration with another product or system to function, it does not mean that the other product or system is part of the financial product.
A financial product must be something people can ‘issue’ or ‘acquire’ to ‘deal’ with. You cannot issue or acquire a system that helps a facility operate.
Therefore, when identifying the financial product, you must look at when a person:
- makes a financial investment;
- manages a financial risk; or
- makes the NCP.
When applying this test, the Court determined that ‘financial product’ was the arrangement between BPS and each user. This allowed the user to make NCPs with the Qoin Wallet. It did not include the system components like the Qoin Blockchain or the Qoin tokens.
Australian businesses in the crypto and fintech space should pay close attention to this test and principle. This affects the Australian Financial Services Licence (AFSL) authorisations you require, whether you obtain your own AFSL or get authorised under someone else’s AFSL.
Continue reading this article below the formExemptions
In this case, the Court also discussed the following exemptions for holding an AFSL:
Exemption | Description |
Authorised Representative Exemption | Allows a person to provide financial services on behalf of an AFSL holder. They must be an authorised representative through written notice. |
Intermediary Authorisation Exemption | When a person (ie. the product provider) issues the financial product, an AFSL holder (under an ‘intermediary authorisation’ arrangement) makes offers to people. These offers arrange for the product provider to issue the financial product according to the offer. |
Specific Arrangements
At certain points, BPS made arrangements that concerned these exemptions. These included:
- First Billzy Arrangement: In December 2019, BPS signed an ‘Authorised Representative Agreement’ and an ‘Intermediary Agreement’ with Billzy Pty Ltd (Billzy), an AFSL holder with NCP facility authorisations.
- PNI Arrangement: In November 2020, anticipating the end of the arrangement with Billzy, BPS signed an ‘Authorised Representative Agreement’ with PNI Financial Services Pty Ltd (PNI). PNI was also an AFSL holder with NCP facility authorisations.
- Second Billzy Arrangement: In September 2021, BPS and Billzy returned to their previous arrangement, executing a new ‘Authorised Representative Agreement’ and an ‘Intermediary Agreement’
Authorised Representative Exemption
Under the authorised representative exemption, the court provided crucial guidance on the phrase ‘on behalf of’. ASIC argued that because BPS was the issuer of the Qoin Wallet, it was not providing financial services on behalf of Billzy or PNI. Essentially, ASIC claimed that the Qoin Wallet had to be a product of Billzy or PNI.
Justice Downes rejected this argument, stating that an AFSL holder can generally decide the circumstances under which it authorises someone to act on its behalf. Her honour also noted that the law lists specific circumstances that void an authorisation, and ASIC’s argument was not among them.
Despite this, the Court found that BPS was:
· unable to rely on the Authorised Representative Agreements with Billzy; and
· able to rely on the Authorised Representative Agreement with PNI.
The Court found that BPS was authorised in providing general advice on and dealing in “non-cash payment facilities issued by [Billzy], limited to [Qoin or the Qoin Wallet etc.]” under the authorised representative agreements with Billzy in both the First Billzy Arrangement and the Second Billzy Arrangement.
The failing of BPS was that, based on the agreements, BPS had the authority to issue NCP facilities issued by Billzy, but the Qoin Wallet was actually an NCP facility issued by BPS. Therefore, BPS issued the NCP facility directly, rather than arranging for Billzy to issue it. Interestingly, the Court accepted that BPS and Billzy had intended for BPS to be the issuer of the Qoin Wallet. However, it also noted that it could not correct this error in the agreements’ drafting.
In contrast, the Court found that BPS could rely on the authorised representative exemption during the period it was covered under the PNI Arrangement. This is because it authorised BPS to issue the Qoin Wallet and give general financial product advice about it.

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Intermediary Authorisation Exemption
The Court clarified that the intermediary authorisation exemption requires the issuer of the product to be a different entity from the one offering it. Therefore, the intermediary agreements under the First Billzy Arrangement and Second Billzy Arrangement did not meet this criteria. The agreement attempted to authorise BPS to both make the offers for the Qoin Wallet and issue the Qoin Wallet, which is not allowed under the exemption.
Key Takeaways
This case highlights the importance for Australian crypto and fintech businesses to clearly understand the financial services they provide and the relevant regulatory framework. Suppose your business uses exemptions, such as authorised representative or intermediary arrangements. If so, you must ensure experienced lawyers carefully draft your agreements to meet specific legal requirements.
If your crypto or fintech business needs assistance navigating the complex regulatory landscape, our experienced fintech lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 1300 544 755 or visit our membership page.
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