According to KPMG’s Australia Fintech Landscape report, the blockchain and cryptocurrency industry in Australia will experience a major downturn by 2024. The sector is expected to decline 14% on an annual basis.
The study found that more than 7% of fintech companies in the country ceased to operate this year. Blockchain and crypto markets were the most affected.
Australia’s Fintech sector shrinks for the second year in a row
Fintech companies in Australia have been declining for the past two years. They went from 800 in 2022, to 767 on December 9, 2024.
One-fourth of the 60 companies that closed this year were in the blockchain and cryptocurrency sector.
“The blockchain space and cryptocurrency was the most affected in the Australian Fintech landscape. It decreased by 14% YoY, with 74 firms active as of 2024.”
Around 4.5% of closures are attributed to the closing down of firms, while 3% were due to mergers and acquisitions.
KPMG says that many of these M&A transactions were driven by strategic buyers seeking to improve specific business capabilities.
The report also highlighted the increasing interest in artificial Intelligence, which contributed to the decline of blockchain and crypto firms.
KPMG suggests that recent crypto developments such as the approval by the United States of spot Bitcoin Exchange-Traded Funds (ETFs), could help revive this sector in 2025.
In addition, the expected U.S. rate cuts as well as the growing demand for alternative investment may encourage new crypto-focused companies to be established in the next year.
In Australia, the regulatory environment is undergoing a major overhaul.
The Australian Securities and Investments Commission released a paper last week proposing a comprehensive license framework for the majority of crypto firms.
The Australian Transaction Reports and Analysis Centre soon after flagged cryptocurrency as a priority in the coming year.
The agency intends to create a Task Force to crackdown on crypto ATM providers who may be violating Anti-Money Laundering Laws.
Kraken raises concerns about the lack of regulatory in Australia
Kraken expressed concerns in September about the lack of regulatory clarity Australia after a Federal Court decision against its fiat-margin trading product.
The exchange stated that Australian crypto businesses continue to operate in a “confusing, uncertain regulatory environment.”
The exchange said that the decision of the court highlights the issue of regulatory ambiguity regarding the country’s attitude towards cryptocurrency.
