Indonesia’s Cryptocurrency Community in 2022: An Overview

Crypto is the next big thing in Indonesia. According to the Ministry of Commerce, transactions for currencies such as Bitcoin (BTC) grew more than 14 times from a total of 60 trillion rupiah ($4.1 billion) in 2020 to a total of 859 trillion rupiah ($59.83 billion) in 2021.

It’s getting to the point where crypto is becoming more popular than traditional stocks. Deputy Minister of Commerce Jerry Sambuaga declared that more than 11 million Indonesians bought or sold crypto in 2021. In comparison, according to the Indonesian Central Securities Depository, the total number of portfolio investors — indicated by the number of individual investor identities — is reaches 7.35 million in 2021.

Yet 11 million crypto investors are still 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, including but not limited to:

Regulatory support from government agenciesIncreased easy access to cryptocurrency tradingAdoption from major local tech players

Regulators want to make things safer

While crypto assets are still not allowed as a means of payment, companies are welcome to buy and sell crypto as commodities in Indonesia. Since 2019, cryptocurrency trading in Indonesia has been officially supervised and regulated by the Commodity Futures Trading Regulatory Agency (BAPPEBTI), an agency under the Department of Commerce.

This governing body is charged with, among other things, vetting, documenting and approving companies and commodities that may be traded in Indonesia. From 2021 it is whitelist of allowed crypto tokens reached 229 items, including popular assets such as Bitcoin, Ether (ETH), Polkadot (DOT) and Cardano (ADA).

These items are allowed based on BAPPEBTI’s proprietary vetting methods, taking into account market cap rankings and security, background checks from the development teams, blockchain systems administration, and development roadmaps with verifiable success metrics.

In an official statement, the governing body repeated its main purpose is to provide legal certainty and protect the interests of Indonesian crypto consumers. BAPPEBTI stated:

“With the new rules we had published, it is hoped that we and crypto exchanges in Indonesia can work together to ensure that every crypto transaction is legally regulated and safe for investors in Indonesia.”

Another governing body, the Financial Service Authority, specifically: forbidden financial service providers, such as credit or credit services, from marketing or facilitating crypto trading, reiterating BAPPEBTI’s regulations that all crypto exchanges must be specifically registered with them.

The aforementioned increase in both crypto and stock investors in Indonesia goes hand in hand with the rising popularity of fintech apps, such as Bareksa and Ajaib, meaning that a large proportion of these new investors may be novices. Tokocrypto, a prominent local crypto exchange, has declared it aims to partner with the government to make trading safer by educating investors about the risks of crypto trading and how to avoid legally dubious exchanges and assets.

Companies planning to boost crypto adoption in Indonesia should build an active and positive working relationship with the government and ensure that all its regulations are followed in order to gain the trust of local consumers.

17 Registered Crypto Exchanges in Indonesia

Until March 2022 there were 17 companies registered and allowed by BAPPEBTI to exchange cryptocurrencies in Indonesia, with their user base growing rapidly. As the industry leader, Indodax reported achieving 5 million members in 2022, an increase of 104% from 2021. Another prominent exchange, Tokocrypto, had reported that it 2 million members by the end of 2021 an eightfold increase compared to 2020.

As mentioned above, a big factor contributing to the success of these platforms is their mobile-first strategy, with easily accessible apps. With Indonesia’s internet penetration at 73.7% in 2021, it’s no wonder there’s more traction from the country’s mobile users.

The crypto community in Indonesia is also growing beyond just exchanges. The Indonesia Blockchain Association, a local consortium and advocacy group for blockchain and cryptocurrencies, has 28 affiliated companies and organizations as of 2022. The association includes not only exchanges but also startups and technology companies using blockchain in their ecosystem and media platforms specializing in crypto.

Steven Suhadi, co-founder of Indonesia Crypto Network and founding member of the Indonesia Blockchain Association, told Coin-Crypto: “Regulators in Indonesia have adapted to technological changes over the past 10 years, from e-commerce to ride-hailing and, most recently, P2P [peer-to-peer] lend. Indonesia already has clearly defined rules for exchanges and crypto trading. In the past 24 months, regulators have taken more proactive steps for digital assets, which will help to spread 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 crypto’s popularity.

Local Tech Leaders Welcome Crypto With Open Arms

In December 2021, crypto 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. MDIs wallet has several companies that have become household names in Indonesia, including financial technology leaders Kredivo and KoinWorks.

Binance founder and CEO Changpeng Zhao has expressed his confidence and goals regarding crypto in Indonesia, stating“With rapid technology adoption and strong economic potential, Indonesia could become one of the leading centers of the blockchain and crypto ecosystem in Southeast Asia.”

This sentiment was echoed by MDI CEO Donald Wihardja, who: declared“Cryptocurrencies, crypto assets and the underlying technology, blockchain, will be an undeniably important part of financial and other digital infrastructures in the future.”

It is worth keeping a close eye on this partnership going forward, but at the moment it can be taken as a sign that crypto is no longer a niche market in Indonesia. More regular players have stepped in, which could mean more resources and momentum to increase adoption.

What’s next for Indonesia?

With the increasing trend in transaction volume and the number of merchants and exchanges in recent years, we can assume that crypto and blockchain will only grow in 2022 and beyond. Nonfungible tokens (NFT) recently came under 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 artistic scene, NFTs are arguably the latest chapter in Indonesia’s crypto journey – either way, it’s become an emerging market to watch out for.

Reporting by Diaz Praditya.

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