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Indonesia's cryptocurrency community

Crypto is the next big thing in Indonesia. According to the Ministry of Trade, transactions of currencies such as Bitcoin (BTC) grew more than 14 times, from a total of Rp 60 trillion (US$4100 million) in 2020 to a total of Rp 859 trillion (US$59.83 billion) in 2021. It is getting to the point where cryptocurrencies are becoming more popular than traditional stocks. Deputy Trade Minister Jerry Sambuaga pegged that more than 11 million Indonesians bought or sold cryptocurrencies in 2021. In comparison, according to the Indonesian Central Securities Depository, the total number of wallet investors, indicated by the number of individual investor identities, reached 7.35 million in 2021.

Eleven million crypto-investors still represent only about 4% of Indonesia's total population, meaning there is still plenty of room to grow. The growth of the crypto community in Indonesia goes hand in hand with several supportive local phenomena, which include, among others:

  • Regulatory support from government agencies
  • Increased ease of access to cryptocurrency trading
  • Adoption of the leading local technology players
  • Regulators aim to make things safer

Although crypto assets are not yet allowed as payment instruments, companies can buy and sell cryptos as commodity trading products in Indonesia. Since 2019, cryptocurrency trading in Indonesia has been officially supervised and regulated by the Commodity Futures Trading Regulatory Agency (BAPPEBTI), a body under the Ministry of Trade. This governing body is, among other things, in charge of reviewing, documenting, and approving the companies and commodities that are allowed to trade in Indonesia. As of 2021, its allowlist of permitted crypto tokens reached 229 items, including popular assets such as Bitcoin, Ether (ETH), Polkadot (DOT), and Cardano (ADA).

These elements are allowed according to BAPPEBTI's vetting methods, taking into account market capitalization ratings, security, development team background checks, blockchain system management, and development roadmaps with verifiable success metrics.

In an official statement, the governing body iterated its main objective is to provide legal certainty and protect the interests of Indonesian cryptocurrency consumers. BAPPEBTI stated, "With the new rules we have published, it is hoped that we and cryptocurrency exchanges in Indonesia can work together to help ensure that every cryptocurrency transaction is legally controlled and safe for investors in Indonesia."

Another governing body, the Financial Services Authority, has expressly prohibited financial services companies, such as lending or credit services, from marketing or facilitating cryptocurrency trading, reiterating BAPPEBTI's regulation that all cryptocurrency exchanges must register with them. The boom, as mentioned above, in the number of crypto investors and shares in Indonesia goes hand in hand with the growing popularity of fintech apps such as Bareksa and Ajaib, meaning that a large portion of these new investors could be newbies. Tokocrypto, a leading local crypto exchange, has set its intention to work together with the government to make trading safer by helping to educate investors about the risks of cryptocurrency trading and how to avoid legally dubious exchanges and assets. Companies planning to boost cryptocurrency adoption in Indonesia will need to establish a dynamic and positive working relationship with the government and ensure compliance with all its regulations to gain the trust of local consumers.

17 crypto exchanges registered in Indonesia

As of March 2022, there have been 17 companies registered and authorized by BAPPEBTI to exchange cryptocurrencies in Indonesia, and their user bases are increasing rapidly. Market leader, Indodax has upgraded 5 million members in 2022, an increase of 104% compared to 2021. Another major exchange, Tokocrypto, had reached 2 million members by the end of 2021, an eight-fold increase compared to 2020. As mentioned above, a significant factor contributing to the success of these platforms is their mobile-first strategy, with easily accessible apps. With internet penetration in Indonesia being 73.7% in 2021, it is not surprising that there will be more traction from the country's mobile user base.

Indonesia's crypto community is also growing beyond exchanges. For example, the Indonesia Blockchain Association, a local consortium and advocacy group for blockchain and cryptocurrencies has 28 member companies and organizations as of 2022. The association comprises exchanges and startups, and tech companies that use blockchain in their ecosystem and specialized cryptocurrency media platforms.

Steven Suhadi, the co-founder of Indonesia Crypto Network and founding member of the Indonesia Blockchain Association, told Cointelegraph, "Regulators in Indonesia over the past ten years have become adaptive to technological changes, from e-commerce to ride-sharing more recently, P2P [peer-to-peer] lending. Indonesia already has defined rules for cryptocurrency exchanges and trading. Over the past 24 months, regulators have taken more proactive for digital assets, which will help the damaged measures of Bitcoin and cryptocurrencies in Indonesia." More supply means more demand, and with more players entering the country, the stage is set for another boost in the popularity of cryptocurrencies.

Local tech leaders welcome cryptocurrencies with open arms.

In December 2021, cryptocurrency exchange Binance announced a joint venture with a consortium led by MDI Ventures to develop a new digital asset exchange in Indonesia. MDI is the $830 million venture capital arm of Indonesia's largest telecommunications company, Telkom Indonesia. MDI portfolio has several companies that have become household names in Indonesia, including financial technology leaders Kredivo and KoinWorks. Binance founder and CEO Changpeng Zhao have expressed his confidence and goals regarding cryptocurrencies in Indonesia, stating, "With rapid technology adoption and strong economic potential, Indonesia could become one of the major hubs of the blockchain and crypto ecosystem in Southeast Asia."

This sentiment was echoed by MDI CEO Donald Wihardja, who stated, "Cryptocurrencies, crypto assets, and the underlying technology, blockchain, present an undeniably important part of the financial and digital infrastructures in the future." It will be worth keeping a close eye on this partnership in the future, but right now, you may want a sign that cryptocurrencies are no longer a niche market in Indonesia. More major players have started to move into it, meaning more resources and momentum to increase adoption.

What's next for Indonesia?

With the increasing trend in transaction volume and the number of traders and exchanges in recent years, we can assume that cryptocurrencies and blockchain will only grow in 2022 and beyond. Non-fungible tokens (NFT) recently came into the spotlight in Indonesia after news broke about Ghozali, a computer science student who made more than $1 million selling NFT selfies on OpenSea. With Indonesia's burgeoning crypto community and already vibrant art scene, NFTs could be the latest chapter in Indonesia's crypto journey; either way, it has become an emerging market to watch.

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