Australia’s blockchain and cryptocurrency sector faced a significant downturn in 2024, experiencing a 14% year-on-year decline, according to KPMG’s Australia Fintech Landscape 2024 report.
The study revealed that over 7% of the country’s fintech companies ceased operations this year, with the blockchain and crypto markets hit the hardest.
Australia’s Fintech Sectors Shrinks For Second Year
The number of fintech firms in Australia has been shrinking for two consecutive years, falling from 800 in 2022 to 767 by December 9, 2024.
Of the 60 companies shutting this year, 14% were from the blockchain and cryptocurrency space.
“The blockchain and cryptocurrencies space was the hardest hit in the Australian fintech landscape, decreasing by 14% YoY with 74 active firms as of 2024.”
Approximately 4.5% of the closures were attributed to firms shutting down, while 3% resulted from mergers and acquisitions (M&A).
KPMG said many of these M&A deals stemmed from buyers’ strategic efforts to strengthen specific business capabilities.
The report also pointed to the growing interest in artificial intelligence, which has contributed to the decline in blockchain and crypto firms.
However, KPMG suggested that recent pro-crypto developments, such as the approval of spot Bitcoin exchange-traded funds (ETFs) in the United States, could help revive the sector in 2025.
Additionally, expected U.S. interest rate cuts and a rising demand for alternative investments may encourage the establishment of new crypto-focused businesses in the coming year.
Meanwhile, regulatory developments in Australia indicate increased scrutiny of the crypto industry.
Last week, the Australian Securities and Investments Commission (ASIC) released a consultation paper proposing a comprehensive licensing framework for most crypto firms.
Shortly after, the Australian Transaction Reports and Analysis Centre (AUSTRAC) flagged crypto as a priority for the year ahead.
The agency plans to create a task force to crack down on crypto ATM providers that may be flouting Anti-Money Laundering laws.
Kraken Raises Concern About Lack of Regulatory in Australia
In September, Kraken raised concerns about Australia’s lack of regulatory clarity following a Federal Court ruling against its fiat margin trading product.
The exchange said Australian crypto businesses and investors continue operating in a “confusing and uncertain regulatory environment.”
The exchange claimed that the court’s decision underscores the broader issue of regulatory ambiguity in the country’s approach to cryptocurrency.
“This ruling makes it clearer than ever that bespoke crypto regulation is urgently needed.”
Despite Australia’s increased crypto scrutiny, crypto adoption is still growing.
As reported, the country has one of the highest rates of cryptocurrency adoption globally, ranking 9th out of 26 countries for crypto adoption.
The crypto ownership rate in Australia is 17%, which is higher than the global average of 15%.
The cryptocurrency user base in Australia is notably young, with a significant portion of crypto investors under 24.
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