Australia’s Fintech Sector Sees 7% Decline with 14% in Crypto Firms
The Australian fintech sector faces challenges, with over 7% of companies closing in 2024. The most affected are blockchain and cryptocurrency firms. A KPMG study indicates a noticeable decline in the fintech landscape over the past two years.
The number of independent fintech firms decreased from 800 in 2022 to 767 by December 9, 2024. KPMG's report highlights that among 60 closed firms, 14% were in the blockchain and crypto industry.
“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,” stated the report.
Mergers, Acquisitions, and Blockchain Decline
KPMG's study found that approximately 4.5% of firms closed completely, while 3% ceased operations due to mergers and acquisitions aimed at enhancing capabilities through specialized fintech firms.
The decline in blockchain and crypto firms is influenced by increasing interest in artificial intelligence, which diverts attention and resources away from these sectors. AI is currently capturing investor interest more than blockchain and crypto ventures.
However, there may be potential for recovery. KPMG noted that the approval of spot Bitcoin exchange-traded funds (ETFs) in the U.S. could positively impact investments in Australia’s crypto and blockchain firms in 2025.
Potential for a Crypto Rebound in 2025
The outlook for 2025 could improve if global factors align. Anticipated interest rate cuts in the U.S. may renew enthusiasm for alternative investments, making riskier assets like crypto more appealing. This could lead to the emergence of new blockchain and crypto firms.
Regulatory changes in Australia complicate the situation. On December 4, the Australian Securities and Investment Commission (ASIC) proposed a comprehensive financial licensing framework for crypto firms, potentially reshaping the crypto landscape with clearer regulations.
On December 6, the Australian Transaction Reports and Analysis Centre (AUSTRAC) announced plans for increased scrutiny of the cryptocurrency industry in 2025. AUSTRAC CEO Brendan Thomas emphasized the need to reduce criminal use of cryptocurrency in Australia, stating, “This is the first step in AUSTRAC’s focus to reduce the criminal use of cryptocurrency in Australia.”