Blockchain and cryptocurrency-focused firms accounted for the largest share of fintech shutdowns in Australia in 2024.
A report by KPMG on December 9, 2018 stated that the Australian Fintech Landscape will be “most affected” by the Blockchain and Cryptocurrency space in 2024.
Around 7% of the fintech firms based in Canada ceased to operate between 2023-2024. This equates to 60 companies closing down.
Report: The number of fintech companies dropped from 800 to 767 by December 2024, a drop of more than 50% since 2022.
The number of fintech firms in Australia that have exited this year is 14%.
The nation currently has 74 firms active in the sector, including prominent companies like SwyftX or CoinSpot.
KPMG says that the main reason for this decline was “the global shift of attention from blockchain to AI”. Investors “deployed capital to the increasingly important AI area to convert their business into forward-looking, AI-capable enterprises.”
KPMG’s researchers, however, believe that this decline is only momentary and point to catalysts which will reverse the trend.
The report specifically cited approval of Bitcoin Exchange-Traded Funds in the United States, as a catalyst that could revitalise the blockchain industry.
Monochrome Asset Management’s IBTC Fund became the nation’s first ETF to hold Bitcoin directly earlier this year.
KPMG also noted that rate cuts expected in Australia and across other global markets “could release capital which has been on the sidelines” making risk assets such as cryptocurrencies more attractive investment options.
Australia enhances crypto oversight
In this context, Australian regulators are looking at ways to increase oversight in the crypto industry, with a focus on taxation and protection of investors.
The Australian Treasury Department published a paper last month on the implementation of the Organisation for Economic Co-operation and Development (OECD), Crypto-Asset Reporting Framework, which aims to set guidelines for collecting and reporting tax data about crypto assets.
The guidelines, if implemented, will require that crypto exchanges within the country report all crypto transactions to the tax authorities.
The Australian Securities and Investments Commission, ASIC has recently released Consultation Paper 381 which outlines plans for addressing regulatory gaps and improving investor protection in the crypto-industry.
Regulations would regulate exchanges, other platforms and service providers such as crypto assets under Australian Financial Services Licences and Market Licences.
Market participants are concerned that tighter regulation could force crypto pioneers into offshore markets.
In the next year, AUSTRAC (Australian Transaction Reports and Analysis Centre) will crackdown on money-laundering activities and scams fuelled by ATMs that accept cryptocurrency in Australia.
AUSTRAC, as previously reported by ICD has established an internal taskforce that ensures crypto ATM operators comply with the anti-money-laundering laws in the country and will be subjected to penalties and enforcement actions for noncompliance.
As new information becomes available, this post Australia’s tougher crypto laws trigger decline in blockchain firms may be updated.
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