According to Cointelegraph, a recent KPMG study reveals that over 7% of fintech companies based in Australia have ceased operations in 2024, with the blockchain and cryptocurrency sectors experiencing the most significant impact. The report highlights a downward trend in the number of independent fintech firms in the country, which has decreased from 800 in 2022 to 767 active firms across various business sectors as of December 9, 2024.
The blockchain and cryptocurrency industry accounted for 14% of the 60 Australian fintech firms that closed in 2024. The KPMG Australia Fintech Landscape 2024 report indicates that this sector was the most affected, showing a 14% year-on-year decline, leaving 74 active firms in 2024. The report attributes approximately 4.5% of these closures to firms ceasing operations, while 3% resulted from mergers and acquisitions (M&A), primarily driven by strategic objectives to enhance specific capabilities.
The decline in blockchain and crypto firms is partly attributed to a shift in interest towards artificial intelligence. However, KPMG notes that recent pro-crypto developments, such as the approval of spot Bitcoin exchange-traded funds in the United States, could potentially reverse this trend in 2025. Additionally, the growing interest in alternative investments, supported by anticipated rate cuts, may encourage the establishment of new crypto and blockchain firms in the coming year.
In regulatory developments, the Australian Securities and Investment Commission (ASIC) issued a consultation paper on December 4, proposing a comprehensive financial licensing regime for most crypto firms in Australia. This move is part of a broader effort to regulate the industry more stringently. Furthermore, on December 6, the Australian Transaction Reports and Analysis Centre (AUSTRAC) announced plans to focus on the cryptocurrency sector in 2025. AUSTRAC CEO Brendan Thomas emphasized the need to address the potential for money laundering through crypto ATMs, stating that this initiative marks the beginning of AUSTRAC's efforts to curb criminal activities involving cryptocurrency in Australia. Currently, crypto ATM operators in the country are required to register with AUSTRAC, conduct transaction monitoring, and implement Know Your Customer (KYC) checks on users.
