Regulatory inertia is leaving Australia lagging other countries as crypto flourishes
As we enter 2025, it is clear that the crypto industry is approaching a pivotal moment.
The global crypto market’s upward trajectory and the increasing mainstream adoption of digital assets are undeniable signals of a transformative shift in the financial services ecosystem. Yet, while other nations embrace comprehensive regulation and support for this growing sector, Australia risks being left behind. This is a consequence of regulatory inertia that could undermine the nation’s competitiveness in the digital economy.
Australia has always been a first-adopter market, setting the global pace on what it means to operate a truly digital economy. That same enthusiasm and appetite for innovation is evident in crypto adoption, making the country a natural test bed for fintech and digital asset innovation. This foundation positions Australia as a critical player in the global expansion strategy for many companies, but maintaining this position requires proactive regulation and support.
Our latest research shows the total cryptocurrency market cap increased during 2024 to reach $3.9 trillion, a 127 per cent rise year-on-year, and as of November 2024, the number of crypto owners had reached 653 million.
Depending on market conditions, we expect the number of global crypto owners to reach 750 to 900 million in 2025.
Digital assets are already transforming financial systems and industries. They enable faster, more cost-effective transactions, particularly across borders, by removing intermediaries and leveraging blockchain technology. Their transparency and immutability enhance trust and security while reducing the risk of fraud and errors.
Signs of global progress are impossible to ignore for Australian regulators. The European Union, for instance, has passed the Markets in Crypto-Assets (MiCA) regulation, set to come into full effect from next year. MiCA is designed to create a pro-crypto environment across the EU, attracting investor attention and positioning the bloc as a global leader in digital asset regulation.
Similarly, the US recently approved the Financial Innovation and Technology for the 21st Century (FIT21) Act, a bipartisan effort hailed as a “watershed moment” for the digital asset ecosystem.
Both MiCA and FIT21 provide greater regulatory clarity, balance consumer protection, and foster innovation – setting benchmarks that Australia would do well to follow.
Meanwhile, countries like the UAE and Singapore have long championed crypto-friendly policies, establishing themselves as hubs of innovation and attracting global talent and investment.
These nations exemplify how forward-thinking regulatory frameworks can simultaneously protect consumers and promote economic growth. Key to their success is the avoidance of prohibitive requirements for exchanges that are nearly impossible to meet. These markets demonstrate that high regulatory standards can be achieved without stifling innovation.
Australia, by contrast, faces a critical juncture. The nation has a thriving crypto ecosystem, with homegrown exchanges and a tech-savvy population eager to embrace digital assets.
Yet the absence of a cohesive regulatory framework casts a shadow over the industry’s future. Without clear and robust rules, businesses and investors are left to navigate uncertainty, deterring innovation and undermining global competitiveness.
The case for regulatory action is compelling. Clear regulation is not only about protecting consumers from fraud or bad actors, though this remains essential. It is also about fostering long-term innovation and growth. Fit-for-purpose regulation brings with it greater accountability and confidence for market operators, alongside enhanced consumer protections. A well-regulated market builds trust, attracts international capital and empowers businesses to operate within a defined set of parameters. The alternative is a fragmented landscape where Australian firms are outpaced by their global counterparts.
Encouragingly, recent steps by Australian regulators show a growing awareness of these challenges. The Australian Securities & Investments Commission has put forward regulation for firms operating in the domestic market, given the absence of legislation from the federal parliament. Austrac has also signalled increased scrutiny of compliance with anti-money laundering laws.
However, it is incumbent on everyone within the sector and the broader financial services industry to ensure that these efforts translate into fit-for-purpose regulation that supports both consumers and businesses.
What steps can we take to ensure Australia’s place on the global stage? First, regulators must actively engage with stakeholders from across the industry, including product providers and investors, to develop forward-thinking policies. Second, we should look to successful international models and draw from their successes to create a policy framework that best meets the needs of Australian consumers and investors.
Time is of the essence. Delays in establishing clear regulations increase the risk of a talent and capital exodus to more supportive jurisdictions, creating a loss in employment opportunities and investment within the domestic market.
With our strong tech ecosystem and demonstrated appetite for innovation, Australia has the potential to become a global leader in the crypto space. However, this opportunity hinges on the government’s willingness to act decisively. If we are to secure our place in the rapidly evolving digital landscape, we must treat the crypto industry as a cornerstone of our economic future, not as an afterthought.
Vakul Talwar is head of Australia at Crypto.com
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Australia’s innovative spirit demands proactive regulation to stay ahead in the digital assets revolution and the crypto industry should not be treated as an afterthought.