How the Federal Court Penalised Unlicensed and Misleading Conduct in the Digital Asset Space
On 27 January 2026, the Australian Securities and Investments Commission (ASIC) secured a decisive Federal Court ruling against BPS Financial Pty Ltd for operating its Qoin Wallet product without the required licence and for engaging in misleading conduct related to that digital asset offering. The Court ordered BPS Financial to pay A$14 million in penalties and banned the company from providing financial services without a licence for 10 years.
The case highlights key regulatory expectations around licensing, disclosure, and compliance systems as digital assets continue to intersect with traditional financial services regulation.
Key Details of the Enforcement Action
ASIC initiated civil penalty proceedings against BPS Financial in 2022, concluding that the company had promoted and operated the Qoin Wallet as a non-cash payment facility linked to a digital token without holding an Australian Financial Services Licence as required under the Corporations Act.
The Federal Court found that BPS Financial’s activities between January 2020 and mid-2023 constituted:
• Unlicensed conduct: issuing and providing financial services related to the Qoin Wallet without appropriate authorisation.
• Misleading and deceptive representations: claims about the Qoin Wallet’s regulatory approval, liquidity, exchangeability, and merchant acceptance that created an inaccurate impression for consumers.
The A$14 million penalty comprised approximately A$2 million for unlicensed conduct and A$12 million for misleading and deceptive conduct.
Court Orders and Regulatory Measures
In addition to the monetary penalties, the Federal Court imposed several regulatory measures:
• A 10-year ban preventing BPS Financial from carrying on a financial services business without an Australian licence.
• Orders requiring publication of adverse publicity notices on the Qoin Wallet application and associated website.
• An obligation for BPS to pay most of ASIC’s legal costs in the proceedings.
Federal Court Justice Wendy Downes described the conduct as “serious and unlawful misconduct,” noting the involvement of senior management and deficiencies in the company’s internal compliance systems.
ASIC’s Regulatory Stance and Broader Context
ASIC Chair Joe Longo emphasised that the size of the penalties reflects the importance of licensing and accurate disclosure in the digital asset sector. Regulators have signalled that, even amid efforts to modernise digital asset guidelines, entities must not operate outside established licensing frameworks or make misleading claims about regulatory status or product functionality.
This enforcement action aligns with ASIC’s broader 2026 risk outlook, which identifies digital asset oversight — particularly unlicensed advice and misleading conduct — as a priority area for supervision and enforcement in the coming year.
Compliance Lessons for Financial Institutions and Crypto Providers
The BPS Financial case contains several practical insights for firms operating at the intersection of digital assets and financial services regulation:
Licensing and Regulatory Perimeter
Entities offering products that function as payment facilities, investment products, or financial advice must carefully assess whether their offerings fall within regulated activities requiring an Australian Financial Services Licence. Misclassification or avoidance of licensing obligations can attract significant penalties and operational prohibitions.
Accuracy and Transparency in Marketing
Statements about regulatory approval, liquidity, and acceptance of digital tokens or wallets must be accurate and verifiable. Misleading representations about a product’s status, functionality, or regulatory alignment can constitute deceptive conduct under consumer protection and financial services laws.
Governance and Compliance Systems
This enforcement action underscores the importance of strong internal compliance frameworks, particularly in emerging areas like digital assets. Firms should ensure that product development, marketing, and compliance teams collaborate to assess regulatory obligations and document decision-making processes.
