Coinspeaker
Australia’s Fintech Faces 7% Decline as Crypto Firms Bear 14% Impact
The Australian fintech sector is facing a challenging period as more than 7% of fintech companies based in the country have closed down in 2024. The biggest casualty? Blockchain and cryptocurrency firms. According to a recent study by KPMG, the country’s fintech landscape is shrinking, showing a noticeable decline over the last two years.
The total number of independent fintech firms dropped from 800 in 2022 to just 767 by December 9, 2024. KPMG’s Australia Fintech Landscape 2024 report highlighted this decline across various sectors, with blockchain and crypto being the most affected. Among the 60 firms that shut down, 14% came from this industry alone.
“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,” said the report.
Mergers, Acquisitions, and Blockchain Decline
KPMG’s study revealed that about 4.5% of the firms closed entirely, while another 3% ceased operations due to mergers and acquisitions. Most of these mergers were not random but driven by strategic goals. Buyers were looking to enhance their capabilities by acquiring specialized fintech firms.
Interestingly, the decline in blockchain and crypto firms isn’t just about internal issues. KPMG pointed out that increasing interest in artificial intelligence is pulling attention — and resources — away from blockchain and crypto ventures. The tech world is evolving rapidly, and AI is currently the shiny new toy that investors are chasing.
However, there may be hope on the horizon. KPMG mentioned that the recent approval of spot Bitcoin exchange-traded funds (ETFs) in the United States could spark a reversal of fortunes in 2025. This positive development in the US market may encourage fresh investments in crypto and blockchain firms in Australia.
Potential for a Crypto Rebound in 2025
The outlook for 2025 could change significantly if other global factors align. The expected interest rate cuts in the United States may lead to renewed enthusiasm for alternative investments. Lower rates often make riskier assets like crypto more attractive. This, in turn, might help new blockchain and crypto firms emerge in the coming year.
Regulatory changes in Australia also add another layer of complexity. On December 4, the Australian Securities and Investment Commission (ASIC) proposed a sweeping financial licensing framework for most crypto firms. This proposed regulation could reshape the crypto landscape by setting clearer rules and expectations.
Just two days later, on December 6, the Australian Transaction Reports and Analysis Centre (AUSTRAC) announced its plans to increase scrutiny of the cryptocurrency industry in 2025. Brendan Thomas, AUSTRAC CEO, highlighted a key concern. “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,” he said.
Australia’s Fintech Faces 7% Decline as Crypto Firms Bear 14% Impact
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{Author}Bena Ilyas{/Author}
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