Blockchain and cryptocurrency-focused firms accounted for the largest share of fintech shutdowns in Australia in 2024.
According to a December 9 report from professional services firm KPMG, the blockchain and cryptocurrency space were “the hardest hit in the Australian fintech landscape” in 2024.
Roughly 7% of fintech companies headquartered in the country ceased operations between 2023 and 2024, amounting to a total of 60 firms shutting down.
The total number of independent fintech firms dropped to 767 in December 2024 from a high of over 800 in 2022, the report added.
Firms belonging to the blockchain and crypto sector accounted for 14% of the total number of firms that exited the Australian fintech space this year.
Currently, the nation houses 74 active firms in this sector including prominent firms like SwyftX and CoinSpot.
According to KPMG, the primary driver behind this drop was the “global shift in spotlight from blockchain technology to AI,” with investors “deploying capital in the increasingly important AI space to convert their businesses into forward-looking and AI-capable” enterprises.
However, KPMG researchers believe this downturn is momentary, pointing to positive catalysts that will help reverse this trend in the future.
Specifically, the report cited the approval of Bitcoin exchange-traded funds in the United States as a potential catalyst for revitalising the blockchain sector.
Earlier this year, Monochrome Asset Management’s IBTC fund became the first ETF in the country to directly hold Bitcoin.
Among other potential drivers, KPMG noted that expected rate cuts across several global markets, also anticipated in Australia, “could free up capital that has been sitting on the sideline” and make risk assets like cryptocurrencies a more viable investment option.
Australia increases crypto oversight
Amid this backdrop, regulators in Australia are looking to ramp up oversight of the crypto sector, focusing on areas like taxation and investor protection.
Last month, Australia’s treasury department published a consultation paper on whether it should implement the Organisation for Economic Co-operation and Development’s (OECD) Crypto-Asset Reporting Framework that seeks to establish guidelines for reporting and collecting tax data on crypto assets.
If implemented, the guidelines will require crypto exchanges in the nation to report crypto transactions to tax authorities.
More recently, the Australian Securities and Investments Commission (ASIC) issued Consultation Paper 381, constituting plans to address regulatory gaps in the crypto industry and enhance investor protection measures.
The regulations would classify crypto assets as financial products and regulate service providers like exchanges and other related platforms under the Australian Financial Services Licence and Market Licence frameworks.
Several market participants have raised concerns that stricter regulations could compel crypto pioneers to move to offshore markets.
Meanwhile, in the coming year, the Australian Transaction Reports and Analysis Centre (AUSTRAC) has vowed to crack down on scams and money laundering activities fuelled by cryptocurrency ATMs in Australia.
As previously reported by Invezz, AUSTRAC has created an internal task force that will ensure crypto ATM operators in the country comply with anti-money laundering laws and are subject to enforcement action and penalties for non-compliance.
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