Insights from the BPS ruling on Australia’s crypto compliance gap

A recent Australian court ruling against BPS Financial has revealed significant gaps in the country’s cryptocurrency regulation. The Federal Court found BPS guilty of misleading consumers regarding its Qoin wallet, imposing substantial penalties that underscore the need for more robust compliance measures in the crypto sector.

Outcome of the Court Case

The lengthy legal battle culminated in a decisive verdict that highlighted regulatory shortcomings in Australia’s digital payments sector. The Federal Court mandated BPS Financial Pty Ltd to pay AU$14 million in penalties for operating its Qoin wallet without the necessary license and for making misleading claims about the product.

This case, initiated by the Australian Securities and Investments Commission (ASIC), centered on whether BPS was crossing the line from technology provider to financial service operator. The court concluded that it indeed was.

By marketing the Qoin wallet as a non-cash payment option linked to its digital token, BPS engaged in regulated activities without holding an Australian financial services license, thereby breaching corporate law.

Navigating Regulatory Challenges with Qoin

Between January 2020 and mid-2023, BPS promoted the Qoin wallet as a means for users to transact with Qoin tokens across a network of merchants. The court found this activity went beyond mere software, involving the creation of a payment facility and the provision of financial services and advice, both of which require a license in Australia.

ASIC argued that the structure and promotion of the Qoin wallet encouraged consumers to view it as a viable alternative to traditional payment methods. The court agreed, noting that the absence of a license during this period placed the product outside the protections of Australian consumer law.

Misleading Claims Under Scrutiny

The court also confirmed findings that BPS had engaged in deceptive conduct. Previous judgments in 2024, upheld in 2025, established that the company made false statements about the status and functionality of Qoin.

These statements included claims that the product was officially approved or registered, that Qoin tokens could be easily exchanged for fiat currency or other cryptocurrencies, and that the token was widely accepted by merchants. The court determined that these assertions created a misleading impression of liquidity, acceptance, and reliability.

In 2022, ASIC initiated civil proceedings after concluding that such claims were likely to influence consumer decisions adversely. The Federal Court levied total penalties of AU$14 million, which included AU$1.3 million for unauthorized conduct and AU$8 million for misleading representations.

Furthermore, the court banned BPS from operating a financial service business without a license for ten years, mandated the publication of corrective notices on the Qoin Wallet application and website, and required the company to pay most of ASIC’s legal costs. Judge Downes condemned BPS’s conduct as severe and illegal, highlighting the involvement of senior management and weak internal compliance systems.

Widening Compliance Gaps

The BPS ruling comes at a time when ASIC is adjusting parts of its regulatory approach to cryptocurrencies. In December, the regulator finalized exemptions aimed at simplifying the distribution of stablecoins and wrapped tokens.

These changes allow the use of omnibus accounts with appropriate record-keeping and eliminate the need for certain intermediaries to hold separate Australian financial services licenses. These adjustments aim to reduce compliance costs for businesses operating in digital assets and payments.

In a report published on Tuesday, titled “Key Issues Outlook 2026,” ASIC Chairman Joe Longo identified digital assets and fintech as areas where regulatory gaps remain. The report also highlighted risks related to opaque private credit, operational failures of superannuation funds, high-risk investment sales, and consumer harm related to AI.

Together, these developments illustrate a regulator striving to balance flexibility with consumer protection. The BPS ruling underscores areas where this balance has yet to be fully realized.