Australian Fintech Booming, Bitcoin Could Be Australia's New National Currency

Imagine a sunny beach full of fintech entrepreneurs and bitcoin enthusiasts. Visiting colleagues from Singapore, India and China sit sprawled across the soft sand, commenting on how this coastal city became one of the world’s leading startup hubs. No, this scene isn’t happening in California. It’s actually Sydney, Australia.

According to the KPMG report Scaling the Fintech Opportunity: For Sydney and Australia, there are now at least 579 fintech companies based in Australia. Most are in Sydney, where financial services pull in a larger percentage of the country’s GDP than finance in Hong Kong or Singapore. Investors poured $675 million into Australian fintech in 2016, even though global fintech investment was down.

Read: Peek Inside The Fintech Arms Race Between Banks And Startups

So far, it looks like 2017 will be an equally prosperous year. Sydney-based fintech startups like ZipMoney, which recently raised $40 million, are attracting investment from established power players in New York and London. Could Australia’s coastal capital become a global fintech epicenter?

“We see blockchain and cryptography as an area of tremendous opportunity in Australia,” FinTech Australia CEO Danielle Szetho told International Business Times. “In the next couple of months we should see a lot of industry announcements... related to regulation and ICOs.” FinTech Australia is a professional network with more than 130 unique startups. Cryptocurrency is so popular in Australia there’s even a children’s book explaining blockchain technology through simple poetry making the rounds in Sydney’s tech industry circles.

One major difference that sets Australia apart from the United States is more cohesive legislative approach at the federal level, compared to the American emphasis on states’ rights. “The regulatory framework is quite unified,” Szetho said. The Reserve Bank of Australia already has an internal group devoted to researching blockchain technologies and other disruptive possibilities. According the Sydney Morning Herald, lawmakers from opposing parties are pulling together to propose Australia recognize bitcoin as a national currency.

"This will be a revolutionary leap for the Reserve Bank and for Australian financial institutions, what we want to do here in Parliament is to create the political environment to allow that leap [for an Australian bitcoin blockchain] to occur," Senator Sam Dastyari told Sydney Morning Herald.

Read: Blockchain Technology Regulations: What US Can Learn From Singapore

Australia also has a sandbox approach to fintech regulation, like Singapore and the United Kingdom, which allows lawmakers to be more nimble and responsive. So many of Australia’s leading blockchain startups, like NEM which makes the cryptocurrency XEM, were able to jump into the game early on and grow quickly with the expanding market. Unlike Singapore and to some extent Silicon Valley, most of Australia’s fintech startups are local veterans of the nation’s robust financial services industry.

There are still several challenges facing Australia’s startup culture. The former head of 500 Startups Australia, Rachael Neumann, tweeted a statement about her resignation on Wednesday following sexual harassment allegations against 500 Startups co-founder Dave McClure.

Setting aside the same cultural obstacles local tech industries face worldwide, Szetho said she is confident about the bright future of Australian fintech. The Australian group Blockchain Global recently partnered with the NEM foundation to take the latter’s cryptocurrency platform global. “There’s actually quite a number of interesting blockchain startups here,” Szetho said. "I do think wealth [management tech] is also a clear opportunity for Australia as well."