As an analyst with over two decades of experience in the financial sector, I have seen my fair share of market ebbs and flows. The recent decline in Australia’s fintech landscape, particularly within the blockchain and cryptocurrency industry, is a trend that has piqued my interest.
2024 saw a tough time for Australia’s fintech industry, with over 7% of local fintech companies shutting down. Particularly hard-hit were blockchain and cryptocurrency firms. A study by KPMG revealed that the Australian fintech scene has been contracting, showing a significant decrease compared to the previous two years.
The number of autonomous financial technology companies decreased from 800 in 2022 to 767 by December 9, 2024. This decrease was seen across various sectors according to KPMG’s Australia Fintech Landscape 2024 report, with the blockchain and cryptocurrency sector experiencing the most significant impact. Out of the 60 companies that ceased operations, a staggering 14% were from this sector alone.
According to the report, the sector involving blockchain and cryptocurrencies experienced the most significant decline among Australian fintech industries, dropping by 14% year over year, leaving 74 active companies in this field by 2024.
Mergers, Acquisitions, and Blockchain Decline
According to a study conducted by KPMG, approximately 4.5% of companies completely shut down, while around 3% stopped operating due to mergers and acquisitions. The majority of these mergers weren’t haphazard but were motivated by strategic objectives. The acquiring parties aimed to strengthen their abilities by incorporating specialized fintech firms into their operations.
It’s worth noting that the drop in blockchain and cryptocurrency companies isn’t solely due to internal problems. According to KPMG, there’s a growing focus on artificial intelligence which is diverting attention – and funds – from blockchain and crypto projects. The technology landscape is quickly changing, and at the moment, AI is the latest trend that investors are eagerly pursuing.
Looking ahead, there might be a promising outlook. KPMG notes that the recent green light for spot Bitcoin ETFs in the U.S. could potentially trigger a shift in fortunes by 2025. This optimistic move in the American market may inspire new investments in cryptocurrency and blockchain companies across Australia.
Potential for a Crypto Rebound in 2025
For 2025, the situation could shift dramatically if various global factors coincide. Potential interest rate reductions in the U.S. may spark renewed interest in non-traditional investments. Historically lower rates can make riskier assets such as cryptocurrencies more enticing. This increased appeal might encourage the growth of new blockchain and crypto companies over the next year.
Changes in regulations within Australia also introduce an extra level of intricacy. On December 4th, the Australian Securities and Investment Commission (ASIC) suggested a broad financial licensing system for the majority of cryptocurrency companies. This proposed legislation might redefine the crypto sector by establishing more transparent guidelines and standards.
Starting from December 6th, 2025, I, as an analyst, find myself preparing for a heightened focus by the Australian Transaction Reports and Analysis Centre (AUSTRAC) on the cryptocurrency sector. This increased scrutiny is AUSTRAC’s initial move towards combating the illicit use of digital currencies in Australia. Over the following year, we can expect AUSTRAC to zero in on this industry, aiming to minimize its misuse within our borders.
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2024-12-09 16:12