What makes Australia’s cryptocurrency exchange scene stand out?
Australia has a lot of cryptocurrency exchanges, which could be a reflection of its crypto-thusiasm.
At a glance, the country with the world's largest number of cryptocurrency exchanges per capita may be Gibraltar, courtesy of its deliberately progressive digital currency regulations.
It's home to exchanges including EtoroX, Coinfloor, the Gibraltar Blockchain Exchange, The Rock, Covesting and at least one of Huobi's appendages. If we look at Gibraltar's population of 34,000 and pretend these six names constitute a comprehensive list of all Gibraltar-based exchanges, we find one exchange for every 5,500 residents.
This isn't a particularly useful factoid. Those exchanges are mostly in Gibraltar for regulatory reasons, rather than to serve local customers. Other small countries including Liechtenstein (population 38,000), the British Virgin Islands (population 29,000 and the legal home of Bitfinex), the Cayman Islands, Malta, Estonia and of course Switzerland's Crypto Valley, are all relatively small countries with heavy cryptocurrency presences.
Per capita though, Vatican City (population 800) could blow them all out of the water as long as there's a single priest operating a quiet OTC desk behind its walls.
But when we look at which country has the most local cryptocurrency exchanges, serving local customers rather than international audiences, Australia starts standing out. It's got an unusually active local exchange scene, in addition to the kind of regulatory environment that attracts overseas exchanges.
A cryptocurrency exchange in every pot
Australia has a population of about 25 million and more than a dozen Australia-based cryptocurrency exchanges that either primarily or exclusively serve Australian customers.
Once you get past the tiny, tax-advantageous jurisdictions that bring in the overseas exchanges, Australia could be a strong front runner in the number of cryptocurrency exchanges per capita. It's tough to put a finger on exactly why, because all of the world's crypto front-runners have different reasons for being there.
Depending on which survey you want to go with, the percentage of Australians who own cryptocurrency is somewhere between 7% and 13.5%. It's not especially high compared to other crypto-happy locales, but it still seems to have given rise to an active market.
For contrast, the number of Americans who own cryptocurrency may be as high as 14.4% though, although the country has relatively few exchanges thanks in part to its regulatory lag. In Turkey, surveys have found that a whopping 1 in 5 adults own cryptocurrency, with much of the interest coming following the Lira's currency crisis and a loss of faith in the local currency.
The crown might go to South Korea though, where some estimates say as many as one third of salaried adults own cryptocurrency, for exotic reasons involving seances and a cult called The Church of Eternal Life, as well as more mundane economic reasons.
Australia's preponderance of exchanges may be the result of its welcoming regulatory environment, as suggested by the number of local exchanges and the ongoing interest of overseas exchanges.
Huobi created and then folded an Australian branch, KuCoin struck a partnership with Bitcoin Australia and Binance came Down Under with Binance Lite.
It's a competitive scene, but all these exchanges aren't a glut so much as a reflection of Australia's enthusiasm for cryptocurrency, suggests Bit Trade CEO Jonothan Miller.
"As a member of the Australian crypto community since 2013, we have seen first hand the exponential growth of cryptocurrency, blockchain and digital assets. Australians are tech savvy and (somewhat) early adopters," Miller said. "We have seen the rise of crypto in so many domains... institutionally with the ASX adopting blockchain... rapid acceptance of Bitcoin and cryptocurrencies by regulators in Australia... [and] clear appetite from institutional clients, self managed super funds and sophisticated investors to adopt this asset class."
And where there's enthusiasm, there may be opportunity.
"Australia is certainly enthusiastic [about cryptocurrency] which is evidenced by the array of providers, but there is always an opportunity to provide better services, prices and tools for clients," Miller said.
Bit Trade's acquisition by Kraken may help to this end, Miller suggested, with a larger team and some extra liquidity.
"As of right now, Bit Trade will operate business as usual... We are working together to ensure the same level of quality and individual service for our clients, but now with an even larger global team and more liquidity," he said.
"I have admired Jesse and Kraken for a long time, in particular their dedication to building trust in the ecosystem, for their professional and rock solid platform, and for their genuine enthusiasm for cryptocurrency," Miller added. "These are principals that we always aspired to and the opportunity to join forces with Kraken was one that our whole team welcomed – it's quite rare to have such a unanimous point of view and we know that it’s a great foundation to build on in the years to come."
Foundation to build on
Australia's regulatory environment, which has attracted other overseas exchanges, was also a drawcard for Kraken, Miller said.
"The Australian regulatory regime is certainly clearer than most and this made it an attractive market for consideration by Kraken. Indeed, Bit Trade has long been on the front foot with respect to engagement with industry, government and regulators," he said.
"I had the personal privilege of sitting before the Australian Senate inquiry into Digital Currency in 2015 and distinctly remember thinking that the industry had come of age; the whole ecosystem has matured since then and I think now it is time for us to shine."
"The industry shows every sign of deeper adoption across institutional and traditional traders. We are also seeing the industry receive increased legitimacy in the eyes of regulators and governments," Miller said.
"Furthermore, behind the scenes there’s a continual stream of technical improvements to the underlying platforms, cryptocurrencies and applications built on blockchain that are entering the market. These will improve throughput and privacy without compromising on the core values of decentralization and equal access to all."
"We are incredibly excited at the prospect of helping Kraken grow its presence in APAC and helping service the growing demand globally for institutional-grade cryptocurrency platforms and services."
Of course, it won't be alone in trying to cater to crypto-thusiasm in the region.
Disclosure: The author holds BNB, BTC at the time of writing.