Regulatory treatment of crypto lending & yield products – Australia vs UK, EU, US

The regulatory landscape for crypto lending and yield-generating products is rapidly evolving, with major jurisdictions converging on a common theme: products that offer returns on crypto assets are increasingly being treated in the same way as traditional financial investments. However, while this global direction of travel is clear, the legal pathways, levels of certainty, and regulatory frameworks differ significantly between regions, creating a complex environment for businesses operating across borders.

A recent Australian High Court decision in the Block Earner case has brought particular clarity to this issue, confirming that crypto “earn” and lending products can fall within the scope of regulated financial products requiring licensing. This development aligns substantively with the approach taken in the United States, where regulators have similarly treated such products as securities—albeit primarily through enforcement actions rather than a unified statutory regime.

Elsewhere, the picture is more nuanced. The European Union’s MiCA framework introduces a comprehensive regime for crypto-asset service providers, yet leaves notable gaps in areas such as decentralised finance and crypto lending, while also prohibiting certain forms of yield altogether (for example, interest on stablecoins). In the United Kingdom, a bespoke regulatory framework is currently being developed, with a strong indication that lending, staking, and similar activities will soon be brought within the perimeter of regulated activities requiring FCA authorisation.

Taken together, these developments highlight a clear trajectory toward increased regulation, but also underscore the importance of jurisdiction-specific analysis. For firms offering or considering crypto yield products, understanding these differences is critical to managing compliance risk and structuring products effectively in an increasingly scrutinised global market.

1. Executive summary

Regulatory treatment of crypto lending & yield products – Australia vs UK, EU, US
Date: June 2026

• Australia (Post–High Court Block Earner appeal): Crypto lending / “earn” products are very likely regulated financial products requiring licensing.

• US: Substantively similar outcome—treated as securities—but via enforcement rather than clear statutory classification.

• EU (MiCA): Comprehensive but incomplete—covers intermediaries, but lending/DeFi gaps remain; some yield (e.g. on stablecoins) is prohibited outright.

• UK: In transition toward a bespoke regime; lending/yield will likely become regulated activities requiring FCA authorisation.

Key takeaway: There is global convergence toward regulating yield products like traditional investments, but legal pathways and certainty differ materially, affecting structuring and compliance risk.

2. Australia (benchmark position)

Legal position (High Court, 2026):

• Crypto yield product =

• facility for financial investment, and

• may also be a derivative

• ⇒ Requires AFSL licensing

Regulatory approach:

• Substance over form (economic reality decisive)

• “Loan” characterisation not determinative

• DeFi / offshore structure not a safe harbour

Practical effect:

• Most:

• interest accounts

• lending pools

• staking intermediaries
  → regulated financial products

3. United States

Regulatory approach:

• No unified regime; relies on SEC + state enforcement.

Treatment of yield products:

• Typically classified as securities:

• investment contracts (Howey)

• or notes (Reves)

Key precedent:

• BlockFi settlement ($100m) for unregistered interest-bearing accounts

Practical effect:

• Platforms:

• must register (rare in practice), or

• exit / restrict US market

Comparison to Australia:

• Same substantive outcome (product = regulated investment)

• But:

• less certainty (case-by-case enforcement)

• higher litigation risk

4. European Union (MiCA)

Framework:

• MiCA provides harmonised licensing for crypto-asset service providers (CASPs)

Treatment of lending/yield:

• Centralised services: indirectly regulated via CASP obligations

• Key limitation:

• crypto lending and DeFi largely outside current scope

Critical divergence – yield prohibition:

• Stablecoin issuers:

• cannot pay interest or yield

DeFi:

• Fully decentralised protocols:

• currently excluded (under review)

Comparison to Australia:

• Australia:

• broad functional capture

• EU:

• rule-based categories + explicit gaps

• some yield models prohibited outright, not just regulated

5. United Kingdom

Status:

• Bespoke regime under development (FSMA extension).

Scope under consultation:

• lending and borrowing

• staking

• DeFi

Likely direction:

• These will become**“regulated activities” requiring FCA authorisation**

Key nuance:

• UK is already tailoring classifications:

• e.g. staking excluded from collective investment scheme rules

Comparison to Australia:

• UK is:

• designing new categories

• Australia:

• stretching existing financial product concepts

 6. Key divergences (risk lens)

A. Classification certainty

• High: Australia (post-High Court)

• High but enforcement-driven: US

• Medium (developing): UK

• Fragmented: EU

B. Treatment of yield

• Australia / US:

• Allowed but regulated as investments/securities

• EU:

• Mixed:

• allowed in some contexts

• prohibited (e.g. stablecoins)

• UK:

• Expected to be regulated, not banned

C. DeFi exposure

• Australia: captured if functional control exists

• US: increasing scrutiny

• EU: largely out of scope (for now)

• UK: under consultation

7. Strategic implications for boards

1. Product structuring

• Assume:

• Australia / US: “earn” = regulated investment product

• Avoid:

• reliance on “loan” characterisation alone

2. Jurisdictional tailoring required

• EU:

• check for prohibited yield structures

• UK:

• anticipate future authorisation requirement

3. Licensing strategy

• Likely need:

• AFSL (Australia)

• SEC-compliant structure or exclusion (US)

• CASP authorisation (EU)

• FCA authorisation (UK, forthcoming)

4. Enforcement risk

• Highest: US (multi-agency enforcement)

• Increasing: Australia (post-High Court clarity)

• Lower but tightening: EU / UK

8. Bottom line

There is global convergence toward treating crypto yield products as regulated investment activity, but:

• Australia: clearest and broadest judicial capture

• US: same outcome via aggressive enforcement

• EU: structured regime with gaps and prohibitions

• UK: still designing a tailored framework

For cross-border offerings, the most conservative (Australia/US) standard will generally dictate product design.

Executive comparison 

Below is a comparative mapping of Australia (post–Block Earner High Court) against the UK, EU (MiCA), and US specifically for crypto lending / yield products.