An Australian fintech company, Block Earner has announced plans to launch a new crypto loan service. This is coming in spite of an ongoing court case with Australia’s financial regulator, the Australian Securities and Investments Commission (ASIC), for allegedly offering financial products without a license.
Block Earner announced the new product in a twitter post on 7 September, through its official Twitter handle. Through the product, Australians will be able to use their crypto assets as collateral to borrow Australian Dollars.
Crypto loans are secure loans you can obtain using your crypto assets as collateral. These are becoming quite common as cryptocurrencies now enjoy the status of being regarded as commodities. Like any other collateral, the lender holds onto the crypto assets until the loan is repaid and they can get their assets back.
Should the borrower fail to pay, the assets will be liquidated, i.e transferred to the lender. Such loans are governed by smart contracts which make the decisions automatically, including loan amount the borrower is qualified for, the interest rate, loan term etc.
The firm will start giving out loans in September, with only Bitcoin accepted as collateral and afterwards, other assets can be included.
A Conservative Loan Product
Block Earner’s loan product is designed to be in compliance with regulator’s demands to ensure smooth operation, considering the firm has been in regulatory trouble before. According the the firm’s co-founder Charlie Karaboga, the new loan products have been designed in a “very conservative way” for this reason.
“Like any company in the fintech ecosystem, before we launched the product we got legal opinions. We think that there was no sufficient regulation, or sufficient licenses for us to apply,” Karaboga said.
Following the crackdown by the ASIC, Karaboga closed down Block Earner’s “Earn” program and paid back all the investors. James Coombes, head of business at Block Earner said the new product is not likely to fall into trouble with regulators because it neatly fits into regulatory requirements.
“There is a core difference,” said Coombes. “The Earn product — there was no clear guidance on whether or not a license was required, and that’s why we hold a conflicting view. Whereas this one, the clear guidance is that a license is required to provide consumer credit. So we went and got the license.”
The Need for Regulatory Clarity
Block Earner got in trouble with the law over its “Earn” product as it did not comply with regulations. However, in Karaboga’s opinion, that only happened because the country lacked clear regulation for the crypto industry. This is in spite of his conviction that the regulators are pro-crypto.
Indeed, Karaboga believes his firm was affected by the previous crackdown, not because it violated regulatory provisions.
“We were impacted, unfortunately, most likely probably because we were more visible with our product compared to others, because they were used as an ancillary product, whereas we were using a core product,” he said.
Going forward, the co-founder hopes there will be regulatory clarity to give crypto firms like Block Earner the opportunity to thrive. He said regulatory progress in other jurisdictions such as Hong Kong, Singapore, and the UK could play a role towards compelling Australia to come up with a clear direction for the industry in the near future.
The post Australian Fintech Launches New Crypto Loan Product Despite Legal Tussle first appeared on CryptocyNews.com.
from CryptocyNews.com https://www.cryptocynews.com/australian-fintech-launches-new-crypto-loan-product-despite-legal-tussle/
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