The Case for Investing in RegTech Solutions to Support Crypto Banking in Australia and the U.S.

The global crypto banking sector is at a pivotal juncture, with regulatory clarity and technological innovation emerging as critical drivers of growth. In Australia and the United States, RegTech—regulatory technology—is proving instrumental in mitigating de-banking risks while fostering financial inclusion. As governments and institutions grapple with the complexities of digital assets, investors are increasingly turning to RegTech solutions to navigate evolving compliance landscapes and unlock untapped markets.

Australia: A Model of Regulatory Modernization

Australia’s 2025 AML/CTF Rules, enforced by AUSTRAC, represent a landmark shift in crypto banking oversight. These rules extend regulatory coverage to high-risk sectors, including crypto-to-crypto exchanges and custodial wallets, aligning the nation with FATF standards [1]. However, the rise of de-banking—where traditional banks discontinue services to crypto firms due to perceived compliance risks—has created friction. AUSTRAC acknowledges that such practices inadvertently penalize compliant businesses, pushing illicit activity into unregulated channels [2].

RegTech is bridging this gap. By automating compliance processes through AI-driven transaction monitoring and blockchain-based KYC systems, fintechs and crypto firms can meet stringent AML/CTF requirements without relying on traditional banking infrastructure. For instance, cloud-based RegTech platforms enable real-time risk assessments, reducing operational costs and enhancing transparency [3]. This not only deters de-banking but also supports financial inclusion by enabling underserved populations to access crypto services securely.

The U.S.: Fragmentation and Innovation

The U.S. regulatory framework for crypto remains fragmented, with overlapping mandates across the SEC, CFTC, and FinCEN. This ambiguity has stifled innovation but also created opportunities for agile RegTech firms. A pivotal development in 2025 was President Trump’s executive order targeting “politicized debanking,” which prohibits financial institutions from denying services based on political or ideological affiliations [4]. The Small Business Administration (SBA) has since mandated lenders to audit past policies and reinstate clients previously excluded from banking services [5].

Simultaneously, the Office of the Comptroller of the Currency (OCC) is championing RegTech adoption. AI and machine learning are being deployed to detect fraud and streamline compliance, while blockchain enhances transparency in cross-border transactions [6]. The proposed CLARITY Act, supported by the President’s Working Group on Digital Asset Markets, aims to establish a unified regulatory framework, further incentivizing RegTech investment [7].

RegTech as a Catalyst for Financial Inclusion

Both nations are leveraging RegTech to democratize access to crypto banking. In Australia, ASIC’s focus on AI and big data analytics has enabled real-time compliance monitoring, reducing barriers for small crypto firms [8]. Similarly, U.S. RegTech startups are using machine learning to automate KYC processes, making crypto services accessible to unbanked populations. For example, AI-driven identity verification tools have cut onboarding times from weeks to minutes, a critical factor in expanding financial inclusion [9].

The market’s growth underscores this trend. The global RegTech sector is projected to reach $33.51 billion by 2029, driven by demand for AI-powered compliance solutions [10]. Investors who position themselves in this space stand to benefit from both regulatory tailwinds and the expanding crypto ecosystem.

Conclusion

The convergence of regulatory clarity and RegTech innovation is reshaping crypto banking in Australia and the U.S. By addressing de-banking risks and streamlining compliance, these technologies are not only safeguarding financial systems but also expanding access to digital assets for millions. For investors, the case is clear: RegTech is no longer a niche sector but a cornerstone of the future financial landscape.

Source:
[1] AUSTRAC's 2025 AML/CTF Rules: What Fintechs Must Know, [https://www.flagright.com/post/austracs-new-aml-ctf-rules-raising-the-bar-for-fintech-compliance]
[2] Navigating financial crime risks: The future crypto-asset landscape including opportunities and challenges, [https://www.nortonrosefulbright.com/en-us/knowledge/publications/9d26712e/navigating-financial-crime-risks-part-four]
[3] The Future of Compliance: Emerging RegTech Trends for 2025, [https://www.proxymity.io/views/the-future-of-compliance-emerging-regtech-trends/]
[4] The Debanking Executive Order Is Here - Financial Services, [https://www.mondaq.com/unitedstates/financial-services/1673418/the-debanking-executive-order-is-here]
[5] Looking Ahead on Debanking Sweep-Up, [https://www.jdsupra.com/legalnews/looking-ahead-on-debanking-sweep-up-3903803/]
[6] Financial Technology, [https://www.occ.gov/topics/supervision-and-examination/financial-technology/index-financial-technology.html]
[7] Update on the U.S. Digital Assets Regulatory Framework, [https://www.gibsondunn.com/update-on-the-us-digital-assets-regulatory-framework-market-structure-banking-payments-and-taxation/]
[8] Fintech Compliance Guide 2025: Rules, Risks & Regulations, [https://relevant.software/blog/fintech-compliance/]
[9] Impact of RegTech on compliance risk due to financial misconduct in the United States banking industry, [https://www.researchgate.net/publication/376131222_Impact_of_RegTech_on_compliance_risk_due_to_financial_misconduct_in_the_United_States_banking_industry]
[10] RegTech Market Report 2025-2034 | Forecast, [https://www.thebusinessresearchcompany.com/report/regtech-global-market-report]