I've been active in the Australian crypto space for nearly 4 years now. Some of you reading this have probably been around in the space longer. Some have just entered recently. What follows are my thoughts on the state of crypto (especially DeFi and self-custody) in Australia. Some of it is supported by cold hard facts. Most is based on my observations and various conversations with many key people in the Australian crypto space over the last few years.
Because, over the last few years, I've spoken to countless people both in and out of the country. I've been privileged enough to provide commentary and submissions on policies and legislation and meet the politicians both interested and not interested in what crypto has to offer.
At first, I was excited. Australia was in a unique position in 2021 and 2022. I connected with a crazy amount of talented builders and entrepreneurs from across the country. These talented individuals had a global presence on Twitter, which took over the timeline in late 2022 with #aussiefollowaussie.
In hindsight, that was probably the top.
Even though the bear market hit hard later on, there was still optimism in early 2023 that Australia would change course and become a crypto leader in the region. But by the end of 2023, it was becoming clear that nothing was going to change, and, in fact, was likely to get worse. By this time most banks had introduced holding periods and monthly limits on funds you could transfer into crypto exchanges, without as much as blip on the news radar.
But it didn't really hit me until ASIC decided to sue Block Earner and Finder in early 2024. Even though the ASIC chair had alluded to this in late 2023. I was so focused on what the US SEC was doing that I forgot to look at our own home-grown regulator.
Now in 2025, I am certain that cryto doesn't have a home in Australia and it probably never will. Let me break down why I think so.
I don't pretend to be a macro expert nor have any real insights into how financial markets work. But the one thing that's becoming clear is that the Australian dollar is weakening. Of course, this is due to many reasons, including, but not limited to the following detailed by the Reserve Bank:
the Australian dollar is a "commodity currency" and so its value is closely tied to the prices of key exports like iron ore and coal;
this makes the Australian dollar inherently more volatile when compared to other major currencies;
China's economy is slowing and so it's demand for Australian commodities naturally declines; and
the Australian dollar also has a strong correlation with global risk sentiment and so as people become more risk averse, the demand and value decreases.
With lesser demand for the Australian dollar, the risks of it becoming illiquid increase.
As a result, the only sensible response by the government is to ensure that Australian dollars stay within the current system.
It then follows that there is no real incentive at all for any part of the government to allow you and I to move our Australian dollars out of the system into cryto. Self-custody of BTC, ETH, USDT, etc. is then out of the question.
The Big Four - Commonwealth Bank, Westpac, NAB and ANZ - collectively command more than 70% of the total market share of Australia's financial sector and hold more than 80 percent of all loans. This oligarchical nature of the Australian banking sector is relatively more pronounced when compared to many other countries.
Another difference in the Australian banking system is its regulated capital adequacy requirement as compared with the concept of fractional reserve banking. This does help ensure stability and solvency of banks as capital acts as a cushion to absorb potential losses. However, it does hand the power to the banks to make their own judgement.
In any event, it won't come as any surprise, the major source of profits for the banks is lending, with some 50% of profits from home loans - both owner-occupied and investors. This is fuelled by Aussie obsession for buying property (a topic for another day).
Naturally, customer deposits - savings accounts, checking accounts, etc - provide the liquidity that banks need to make loans, invest in securities and conduct day-to-day operations. These deposits account for about 50% of the liabilities of Aussie banks.
Taking these factors into consideration, the Big Four want Australians to keep money with them. In my view, this likely explains the monthly limits placed on crypto exchange transfers and the unilateral power the Big Four have given themselves to simply block a transfer out.
Similar to the government, the banks do not want money exiting the system into crypto and, when looking at the capital adequacy requirement, the banks especially can't afford for significant funds to leave all at once.
Although you could use it to describe many people, as a population, my view is that Aussies are generally too passive and too trusting.
When it comes to government, there is a notable sense of political apathy and skepticism towards the impact of individual engagement on policy-making and there's a perception that politicians are more responsive to corporate interests than to ordinary Aussies' concerns.
These concerns, of course, should lead to more distrust in the political system. However, nearly 50% of Aussies reported high or moderately high trust in the national government. This may explain why we were so eager to persist for the COVID-19 lockdowns for so long.
Similarly, 94% of Australians agree that banks don’t act in their best interest but at the same time 75% of Aussies trust their traditional bank. This is even more astounding when clear evidence has been found that bank advertising misled customers and fines issued for failing to deliver on promises. This may explain the great reluctance many have of moving money out of a bank and into crypto.
The conclusion I draw from information like this is that, as a population, even though Aussies may be able to identify an issue or problem, we don't take active steps to change course. We might cause a fuss for a little bit but then, we end up just putting up with it.
For example, over a quarter of adult Australians own crypto but we still put up with the limits banks have put on moving funds into crypto exchanges. And the broader population didn't even blink an eye on that point. I mean, more fuss was created about a $3 fee from Commonwealth Bank than the fact that banks are significantly restricting how their own customers can use the money they've deposited.
All that leads me to two conclusions:
The general population will continue to believe the "crypto is bad" narrative; and
The crypto industry is unlikely to get the support it needs to go mainstream from the wider population (unless, perhaps, if it rebrands to remove all references to blockchain and crypto).
A few other general observations that I believe will cause crypto trouble in Australia.
First and foremost, Australia generally takes a risk-averse approach to new technologies and this shows by Australia's significantly lagging other OECD countries in digital innovation. Even perceptions generally view Australia as a follower and not a leader. This could be a good thing if, for example, Australian regulators choose to shift their approach to crypto following the change in the US, but it seems that ASIC is unlikely to do so. Instead it has chosen to expand it's application of current laws to the crypto sector.
Further, Australia has predominantly a service-based economy with roughly two-thirds of its GDP coming from all parts of the service sector. Of course, this also means that an equivalent amount of employment is tied with the service sector. As a result, Australia can't afford to become too efficient. Increased efficiency (whether blockchain technology, AI, etc), leads to increased risk of unemployment, which looks bad for politicians.
Finally, Australia has only very recently decided to define the term "virtual asset" but only with regards to requiring increased compliance with new AML/CTF reforms. This is significant because the definition is extremely broad and no other consultations have actually led to legislation being made. Additionally, there is no evidence to suggest that these increased reforms will do anything except increase compliance costs for both SMEs and crypto business, as evidence suggests criminals get away with more than 99% of money laundering proceeds.
The general theme I glean from all of the above is that Australia prefers the "conservative" or "cautious" approach in its policy-making, where the government prefers to maintain the status quo rather than undertake innovative reforms. This is often sold to the population under the paternalistic guise of "safety".
Given the above, my view is clear. True crypto will not have a home in Australia and, if anything, crypto will become even more restricted in the next few years. So, let me give you some predictions that I think will play out in Australia over the next 5 years:
Onramping (i.e. moving Australian dollars into crypto) will become increasingly more difficult in the short-term (1-2 years). Banks will undertake their own policing and will choose to restrict any crypto exchange they wish without any real consequence;
Licences for crypto exchanges will eventually be implemented, potentially next year. This will be great for the major crypto exchanges. Banks will then realise they no longer have a valid reason to restrict funds moving out to licensed exchanges. The logical next step for the Big Four will then be to acquire crypto exchanges (3-4 years), eventually driving those that don't get acquired out of business (~5 years);
Generally dealing with crypto will become increasingly more difficult as well for the average investor and dev/builder. New AML/CTF reforms will require increased self-policing and AUSTRAC reporting by professionals like lawyers and accountants (2-3 years). This will come at an additional cost to the professionals. Either they will then stop providing services or will provide them at an additional to the average Australian, who will have to toss between investing or building in a legally compliant manner or, if they can't afford to pay, taking the risk (3-4 years);
The ATO will continue to take an aggressive approach to tax collection and will eventually realise that it can collect more capital gains tax if it doesn't allow investors to offset crypto capital losses incurred by things like memecoin trading. This could easily be done by differentiating the category of "virtual assets" applying to coins like BTC, ETH, SOL, etc. from crypto coins that are purely speculative (which it could argue are akin to gambling) (3-4 years); and
The majority of crypto devs and builders will leave Australia, will choose to set up overseas or will choose to work for projects and companies based overseas (2-3 years). This will have a significant brain drain resulting in Australia not being competitive in the crypto space on a global stage. Further, crypto values are likely to no longer exist (or potentially go underground). The outcome I foresee is that there will be no real political will to support the space, other than to regulate it and make it part of the banking system (~5 years).
Regardless of the above predictions, I actually hope I am wrong about all of this. And maybe you think I am. Maybe you think all of this is entirely rubbish.
But it never hurts to have a Plan B.
Jabz
