Australia’s Blockchain And Crypto Sector Has Had A Difficult Year, But The Australia Fintech Landscape 2024 Report Posits That 14 percent Fewer New Starts Made It To The 126 In 2024. However, the downturn falls simultaneously as the country’s digital asset industry struggles under increasingly onerous regulation and economic unease.
This is one of only two studies that monitor the country’s fintech sector and found that 7 percent or more of Australia’s tech companies collapsed this year. Crypto and ‘blockchain’ markets played heavily into the total number of closures on the list.
Australia’s shrinking fintech landscape was proved in a report that saw the number of companies down for a second year. At the end of 2022, the fintech sector had 800 companies; however, after the 9th of December 2024, the number went to 767. Of the fintech companies closing this year, 60, 14 percent were blockchain and cryptocurrency companies.
“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.”
AI Innovation Diverts Focus, Impacting Blockchain And Crypto
About a third (33%) of these companies left the market through M&A (buying companies that either sold for various strategic reasons, ranked on PipelinePepper, or otherwise exited their previous markets) or M&A stock options, wholly 85 and 9, that is, 4.5% of the companies went under altogether, and about 3.0% assimilated with other businesses via M&A.
On the flip side, artificial intelligence (AI) is becoming one of the main drivers behind the downtrend in the blockchain and crypto sectors as it becomes popularized. KPMG said the rapid moves in AI have diverted focus and funding away from the blockchain and cryptocurrency space. As we witness large companies entering the AI space, it looks like fintech subsectors are being skipped a bit, and tech catapults innovation.
Notwithstanding the hardships of 2024, KPMG remained confident that the sector would continue to grow. It noted that recent events, such as approving bitcoin exchange-traded funds (ETFs) in the U.S., could drive the report’s recovery. In 2025, they can help prevent Australia’s blockchain and crypto market from devolving and heading in the wrong direction.
KPMG noted that new crypto-centric businesses may arise in 2019 to capitalize on a U.S. rate-cut environment and rising demand for alternative investments.
However, the more regulation there is in global affairs, the more complicated the work of Australia’s crypto sector will be. Last week, the Australian Securities and Investments Commission (ASIC) released a consultation paper laying out a comprehensive licensing framework for most crypto firms operating in Australia. It’s a series of measures designed to codify tighter regulatory conditions and force the industry to keep its nose clean.
We have released a consultation paper outlining proposals to update our digital asset guidance: https://t.co/PR6k2KDgY7 pic.twitter.com/a3tuRbxOVR
— ASIC Media (@asicmedia) December 3, 2024
Similarly, the Australian Transaction Reports and Analysis Centre (AUSTRAC) said it would give extra attention to cryptocurrency in 2025. AUSTRAC’s task force will target crypto ATM providers accused of breaching AML laws.
The increase in scrutiny, however, comes amid increased concern for the global crypto exchange Kraken, which voiced worries that it was operating in a country without regulatory clarity. After a September ruling, the Federal Court also ruled out Kraken’s fiat margin trading product. Still, the exchange claims the Australian regulatory environment is confused and uncertain for crypto businesses and investors.
Kraken’s worries are a symptom of a more general question: How is this market generally handled in this country? A number of firms seem to be trying to navigate a mosaic of laws and rules.
It is unclear why the market is struggling, and regulatory hurdles still prevent cryptocurrency adoption in Australia from taking off. Then why is Turkey one of the best countries in crypto adoption ( ninth out of 26 )? According to new data, 15 percent of the world’s total population is cryptocurrency owners, but Australia now tops the global average at 17 percent.
Similar to crypto markets in the US, the crypto investor base in Australia is also notably younger than average, with around two-thirds of them under 24 and different numbers actively involved in Australia’s crypto market.
With the ongoing evolution of Australia’s blockchain and crypto industry regulatory framework and the changing global market conditions, Australia’s blockchain and crypto industry future remains uncertain. It’s hard to feel hopeful about traditional cryptocurrencies now, but there’s hope that the field can still recover in the coming years as digital assets appear to be set to make a huge breakout and then pull back in 2025.
