Federal Court Clarifies Meaning of “Debenture” in Crypto Context

Introduction

In Australian Securities and Investments Commission v Wallet Ventures Pty Ltd [2025] FCAFC 93, the Full Federal Court dismissed ASIC’s appeal, ruling that the “Finder Earn” product offered by Finder Wallet Pty Ltd did not constitute a debenture under the Corporations Act 2001 (Cth).

This decision is an important one for fintech and crypto businesses in Australia. It clarifies:

• The legal treatment of stablecoin-based investment products;
• The boundaries of ASIC’s regulatory authority under current legislation; and
• The importance of product structure and contractual terms in determining financial services obligations.

Background

Finder Wallet operated a digital currency exchange (DCE) and offered the Finder Earn product via its mobile application. The product allowed customers to:

• Deposit Australian dollars (AUD) into their Finder Wallet account;
• Convert AUD into TrueAUD, a type of stablecoin;
• Transfer ownership of TrueAUD to Finder Wallet in exchange for a fixed return (e.g., 4.01% p.a., or promotional rates up to 6.01% p.a.); and
• At the end of the investment term, receive back an equivalent amount of TrueAUD plus the return, which was then converted back to AUD.

What is a Stablecoin?

A stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to a fiat currency, such as the Australian dollar. In this case, TrueAUD is a stablecoin issued on the Ethereum blockchain and administered by a U.S.-based company, TrueCoin LLC. It is redeemable at a 1:1 ratio with AUD.  Meaning one TrueAUD can be exchanged for one AUD.

Unlike volatile cryptocurrencies like Bitcoin or Ethereum, stablecoins are intended to minimise price fluctuations, making them attractive for financial products that aim to replicate traditional investment mechanisms.

However, despite their stability, stablecoins are not generally considered to be money under Australian law. They are treated as digital property, which was central to the Court’s reasoning in this case.

What is a Debenture?

The Corporations Act 2001 (Cth) defines a debenture as:

A chose in action that includes an undertaking by the body to repay as a debt money deposited with or lent to the body

The issuer of a debenture will generally require an Australian Financial Services (AFS) Licence, because issuing a debenture is considered to be dealing in a financial product.  As dealing in a financial product is considered to be carrying on a financial services business, a person who does so requires an AFS licence, unless a specific exemption applies.

The Corporations Act (section 766C(4)(c)) does provide for a “self-dealing” exemption.  This applies when a person deals (e.g. issues) only in their own securities and is not otherwise carrying on a financial services business.  However, this exemption does not apply if the issuer:

• Carries on a business of investment in securities, land, or other assets;
• Invests contributions from investors following a public offer or invitation made on terms that the funds will be invested.

Legal Issues

ASIC argued that the Finder Earn product was a debenture under section 9 of the Corporations Act, which would require Finder Wallet to hold an Australian Financial Services Licence (AFSL).

The key legal questions were:

• Did the product involve money deposited with or lent to Finder Wallet?
• Did Finder Wallet undertake to repay that money as a debt?
• Could the product be viewed as a single financial arrangement under section 761B of the Corporations Act involving money?

4. Summary of Findings and Reasons

The Court upheld the primary judge’s decision, concluding:

• TrueAUD is not “money” under the Corporations Act—it is a form of fungible intangible property;
• The Finder Earn product involved a transfer of property, not a loan or deposit of money;
• Customers had a contractual right to receive an equivalent amount of TrueAUD plus a return, but this did not amount to a debt obligation;
• The arrangement resembled securities lending, not traditional debt instruments; and
• Even under section 761B, the product did not constitute a single financial product involving money.

As a result, the Finder Earn product did not meet the statutory definition of a debenture, and ASIC’s appeal was dismissed.

Conclusions and Takeaways

This decision provides some valuable guidance for crypto and fintech businesses operating in Australia including:

• Stablecoins are not “money” under the Corporations Act, even when pegged to fiat currency;
• Product structure and contractual terms are decisive in determining regulatory obligations;
• Digital asset-based investment products may fall outside the scope of traditional financial services regulation.