Once hailed as the new frontier of financial innovation, cryptocurrency in Australia is now at a crossroads.

What began as a decentralized revolution attracting tech-savvy investors and ambitious startups has evolved into a fast-moving, high-stakes ecosystem riddled with opportunity—and risk. As trading volumes surge and blockchain-based solutions mature, so too do the threats of financial crime, consumer harm, and regulatory arbitrage.

In response, Australia’s regulators are stepping in with increasing urgency. From cracking down on inactive digital currency exchanges to planning a digital Australian dollar, authorities are aiming to bring structure and accountability to a sector long likened to the “Wild West.”

Australian investors have taken advantage of bitcoin’s dip earlier this year, steadily increasing their holdings in a high-conviction move that could yield strong returns, with some analysts forecasting the cryptocurrency could surge to $US200,000 in 2025.

Locally, exchange-traded funds (ETFs) tied to bitcoin have seen significant momentum, drawing in $148 million in new investments so far this year—more than twice the amount recorded during the same period in 2024, according to Global X.

AUSTRAC Targets Gaps in Compliance

Australia’s financial crime watchdog, AUSTRAC, has launched a crackdown on dormant digital currency exchange (DCE) businesses, warning that inactive operators must voluntarily deregister or face cancellation.

The new enforcement campaign—dubbed the ‘use it or lose it’ blitz—aims to safeguard consumer confidence, reduce financial crime, and clean up Australia’s digital currency landscape.

Currently, 427 DCEs are registered with AUSTRAC, but the agency suspects a significant portion are no longer trading. AUSTRAC is directly contacting businesses that appear inactive, encouraging them to formally withdraw before action is taken.

“Businesses offering cryptocurrency exchange services operate in a high-risk sector,” said AUSTRAC CEO Brendan Thomas.

 “Because AUSTRAC registration provides legitimacy, inactive businesses are vulnerable to being bought and co-opted by criminals.”

AUSTRAC requires that all businesses exchanging fiat and digital currencies—including cryptocurrency ATM operators—be registered with the agency. These entities must also maintain up-to-date information about their operations.

“Registration cancellations are not just administrative,” Thomas noted.

“They help protect the integrity of the sector, reduce the risk of misuse, and build trust among consumers and investors.”

Inactive exchanges risk being weaponized by criminal networks for money laundering, scams, and ‘money mule’ operations. With scams involving digital currencies on the rise, AUSTRAC is emphasizing proactive enforcement.

Industry Outlook: Clearer Rules, Stronger Ecosystem

The regulatory blitz comes as Australia’s Labor government signals its commitment to digital asset reform, offering new hope to an industry long grappling with uncertainty.

Australia has appointed Andrew Charlton as Assistant Minister for Science, Technology, and the Digital Economy, alongside his new role as Cabinet Secretary, as the government moves to cement its agenda on regulating digital assets and modernizing the tech sector.

Edward Carroll, Head of Global Markets and Corporate Finance at MHC Digital Group, said the government’s direction signalled greater collaboration with the crypto industry

“With much of the groundwork already laid, we’re optimistic that the Labor government can follow through with their commitment to implementing their proposed crypto regulatory framework, which we are broadly supportive of,” Carroll said.

The government’s roadmap includes:

• Licensing requirements for digital asset platforms
• A stablecoin payments framework
• Support for tokenization of real-world assets

These reforms aim to bring clarity and credibility to the space while aligning Australia with global best practices, such as those set out by MiCA in the EU, and similar frameworks in the US, Singapore, Hong Kong, and the Middle East.

Carroll also pointed to another key issue: debanking, where crypto businesses are denied access to traditional financial services. “There’s hope this government will finally address the ongoing debanking issue, which continues to undermine growth and trust in the sector.”

With a 2026 implementation timeline, the industry has some runway—but the time to prepare is now. “If done right, these reforms could bring Australia back in line with the rest of the world so that we can retain talent and build a really exciting and innovative ecosystem,” Carroll added.

Cryptocurrency has emerged as both a breakthrough and a battleground in Australia’s fintech sector. Platforms like CoinJar and Independent Reserve have seen surging Bitcoin and Ethereum volumes, fueled by retail traders and institutional interest. But the rapid growth has also attracted cybercriminals and financial fraudsters.

Many of the inactive exchanges now under scrutiny were launched during the 2021 crypto boom and later abandoned. These dormant businesses are considered prime targets for exploitation by bad actors, according to AUSTRAC intelligence.

Meanwhile, the regulatory spotlight is reshaping the industry. Rather than exit the market, startups are pivoting to more regulated niches, such as tokenized assets and central bank digital currency (CBDC) initiatives.

The Reserve Bank of Australia is currently trialing a digital Australian dollar, with a broader rollout being considered.