As a seasoned researcher with a keen interest in the fintech sector and a particular soft spot for the burgeoning world of blockchain and cryptocurrencies, this piece of news has piqued my curiosity and raised some concerns. The decline in the number of active Australian crypto firms is indeed disheartening, given the potential that these innovative ventures hold for the future of finance.
Approximately 7% of financial technology (fintech) firms based in Australia closed their operations in 2024, according to a study by KPMG, with the blockchain and cryptocurrency sector experiencing the most significant decline in the Australian fintech industry.
Over the past two years, the number of autonomous financial technology companies in Australia has been decreasing. As per the KPMG’s Australia Fintech Landscape 2024 report, this decrease brought down the total active firms from 800 in 2022 to 767 as of December 9th, across all business sectors.
14% of the 60 Australian fintech companies that closed in 2024 were associated with the blockchain and cryptocurrency sector, according to a recent report.
“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.”
Australian crypto firms take the biggest hit in 2024
Approximately 4.5% of the 60 companies stopped functioning, mainly due to closures, whereas around 3% shut down as a result of mergers and acquisitions (M&A). The majority of these M&A transactions were sparked by strategic motives, with acquirers aiming to bolster particular skills or abilities.
According to a report by KPMG, the decrease in blockchain and cryptocurrency companies was linked to an increased focus on artificial intelligence. Yet, positive crypto events like the acceptance of Bitcoin (BTC) exchange-traded funds in the U.S., which occurred recently, could potentially change this pattern by 2025, as suggested by KPMG.
In the upcoming months with potential interest rate reductions, there could be a surge in the formation of new cryptocurrency and blockchain companies, as the increased attention on alternative investments continues.
Giving crypto firms the iron fist treatment
December 4th saw the Australian Securities and Investment Commission (ASIC) release a proposal for a universal financial licensing system that would primarily affect cryptocurrency businesses operating within Australia.
In a disclosure made two days later, on December 6, it was unveiled that Australia’s primary financial intelligence agency, the Australian Transaction Reports and Analysis Centre (AUSTRAC), aims to intensify its focus on the cryptocurrency sector in the year 2025. The CEO of AUSTRAC, Brendan Thomas, stated that cryptocurrency Automated Teller Machines (ATMs) serve as alluring channels for money laundering activities.
“This is the first step in AUSTRAC’s focus to reduce the criminal use of cryptocurrency in Australia. We will be focusing on this industry over the course of next year.”
Operators of Cryptocurrency Automated Teller Machines (ATMs) in Australia are currently obliged to register with AUSTRAC, carry out transaction surveillance, and perform identity verification checks on the users by applying Know Your Customer (KYC) procedures.
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2024-12-09 12:52