Australia’s fintech sector has seen a 7% decline in independent, active firms for the second year in a row, according to the 2023-2024 KPMG Fintech Landscape report.
In 2024, there was a 14% drop in the number of new blockchain and cryptocurrency startups, with only 126 successful launches. This downturn was linked to growing regulatory challenges and economic uncertainty in the digital asset industry.
The KPMG report showed that 7% or more of tech companies in Australia collapsed this year, with about 60 of those in the blockchain and crypto sectors. As of December 2024, the number of fintech companies dropped from 800 in 2022 to 767, signaling a tough year for the industry.
Around 33% of companies exited via mergers and acquisitions, while 4.5% shut down completely and 3% merged with other businesses.
Fund shift toward AI innovation
AI innovation is also playing a role in the decline, as funding shifts toward AI innovation over blockchain and crypto.
Despite the challenges, KPMG is optimistic, pointing to events like the approval of Bitcoin ETFs in the U.S. as potential factors for recovery. They expect new crypto businesses to emerge as demand for alternative investments grows.
Tight scrutiny challenges Australia’s crypto sector
However, increased regulation is making it harder for Australia’s crypto sector to thrive. Recently, the Australian Securities and Investments Commission proposed stricter rules for crypto firms. The Australian Transaction Reports and Analysis Center will also focus more on cryptocurrency in 2025, especially targeting crypto ATM providers for potential anti-money laundering violations.
Despite these regulatory hurdles, Australia’s crypto ownership is higher than the global average, with 17% of Australians owning cryptocurrency. The country’s crypto investor base is also younger, with two-thirds of them under 24.
While the future of Australia’s blockchain and crypto industry remains uncertain, there’s hope for a recovery in 2025 as digital assets continue to evolve.
