The Crypto community around the world is persisting in getting more assertive. Regulators somewhere are looking for rigid regulations to control the ecosystem, and somewhere are looking for legislation that can help embrace the ecosystem.
Following the potential of digital assets, Singapore has some grand ambitions to be the global hub for the industry. Singaporean regulators strive to be key players in digital assets-related businesses as financial centers across the globe.
However, following the scenario across the globe with the digital currency, it seems that soon Indonesia will partake in Singapore's desire.
Indonesian love for cryptocurrencies shows that these assets are going to be the next big thing in the nation. Furthermore, it is noteworthy that the cryptocurrency transactions in the nation have surged by 14 times, according to the Ministry of Trade.
Crypto community is getting more robust than stocks
Following the large-scale embracement of cryptocurrencies by the Indonesian crypto community, it is crystal clear that the residents want digital assets more than traditional ones. Jerry Sambuaga, the vice Minister of Trade, reported that more than 11 million residents in the country had bought and sold digital currency the previous year.
In contrast, the Indonesian Central Securities Depository has also shared some reports previously regarding the cryptocurrency craze in the nation. According to the reports it was noted that the count of portfolio investors has surged to hit above 7 million over the same year.
However, if you look at the total population, it is just 4% of the residents who are investing in digital assets. But there is no doubt that there is still a paved path for cryptocurrencies like Bitcoin and Ethereum to grow in the nation.
Notably, such a boom in the number of both virtual assets and traditional assets investors in the nation goes hand-in-hand with the rising adoption of fintech apps. A large portion of the Indonesian crypto community might be novices.
BAPPEBTI and Financial Service Authority
The Indonesian crypto community is yet to receive a green signal from the regulators to use digital assets for payments. However, the firms can buy and sell virtual currencies as commodities. No proper legislation, but the industry has been overseen by the Commodity Futures Trading Regulatory Agency (BAPPEBTI).
BAPPEBTI is in charge of governing the sector, vetting, documenting, and approving firms and commodity items that are legal to trade in the nation. Indeed, cryptocurrencies are based on the agency's own vetting methods. And the regulators consider the market cap rankings and security, besides other background checks on the developers and management of any project to approve. If any project seems genuine to them and has a tremendous development roadmap with verifiable success metrics, they are all allowed to trade in Indonesia.
The regulators with the aim to make things more secure, iterate their main objective, which is to provide legal security and protect the interests of the residents.
Furthermore, BAPPEBTI is not the nation's only governing and regulating authority. The Indonesian Financial Service Authority is also governing the digital ecosystem there. The authority has specifically prohibited financial institutions from offering cryptocurrency lending, credit, marketing, and trading services. Moreover, the authority also reiterates the Ministry of Trade's body's regulation that the firms should be registered with them.
Tokocrypto, a prominent digital assets exchange in Indonesia, intends to work with the authorities and make the trading of crypto assets more secure. Besides, the exchange and the government are also working on educating the nation about virtual currencies and the risks associated with the trading of such assets. Moreover, they also explain to the residents how to avoid legally dubious firms, platforms, and assets.
In the mid of Q1 2021, the crypto assets exchange rolled out Asia's first crypto hub, which was coined as T-Hub in February 2022. On the picturesque island of Bali, the center aims to act as a physical stomping point for the Asian crypto community. T
he hub gives the community space to gather, ideate, create, enhance, and innovate. In simple words, individuals across the continent can live the virtual currency lifestyle. Furthermore, T-Hub is empowering the mainstream crypto community by equipping them with the knowledge and skill sets required to capitalize.
Although the legislation is not stringent, the crypto community is required to build a dynamic and positive working relationship with the government and financial authorities. Ensuring compliance with all the regulations will help the nation boost cryptocurrency adoption.
Cryptocurrency is significant for the future of digital infrastructure
Late last year, one of the leading global cryptocurrency exchanges announced a joint venture with a consortium. As per the announcement, Binance's venture was led by MDI Ventures, the venture arm of Telkom Indonesia, the country's largest telecommunication firm.
MDI along with Binance aimed to develop new cryptocurrencies exchanges in the nation. The venture portfolio boasts several firms that have gone on to become ménage in the country. The portfolio of MDI also includes fintech leaders Kredivo and KoinWorks.
At the time of the announcement, Changpeng Zhao, the CEO, and founder of the leading crypto assets exchange, expressed his confidence and objectives. According to Zhao:
"With fast technology adoption and strong economic potential, Indonesia could become one of the leading centers of the blockchain and crypto ecosystem in Southeast Asia."
The same tenderness was also repeated by Donald Wihardja, the CEO of Telkom Indonesia:
"Cryptocurrencies, crypto assets, and the underlying technology, blockchain, present an undeniably important part of the future financial and other digital infrastructures."
This coalition between the big players could signify that the Indonesian crypto community is no longer a niche. And it also shows that more mainstream players have begun to move into the country, which could mean more resources and momentum to boost the adoption pace across the nation.
Home of crypto exchanges, startups, and blockchain firms
In the prior month, Indonesians had only seventeen registered cryptocurrency firms and platforms that the regulators authorized. This month the BAPPEBTI allowed one more firm to exchange virtual assets in the nation. Notably, all these firms' user base has improved rapidly.
Indodax, a market leader, has reported attaining five million members since the beginning of this year, with over 100% evolution compared to the previous year. Simultaneously, T-Hub developers also underlined in a report that their exchanges’s user base hit 2 million members by late last year. Indeed, Tokocrypto noticed an eightfold growth in comparison to 2020.
An extensive contributing factor in the success of the crypto community is the mobile-first strategy of the firms. All of them are upholding fintech cryptocurrency services with easily accessible applications. Looking at the country's internet penetration, standing at more than 73% over the previous year, shows more traction from the mobile-heavy users.
On the other hand, it is also heeded that the nation's community is growing beyond just exchanges. We can witness multiple startups and technology firms that use millennial blockchain technology among exchanges.
Indonesia Blockchain Association, a local consortium, and advocacy group of the Indonesian crypto community. Notably, the consortium's 28 member companies and organizations have cryptocurrency assets exchanges and startups, tech firms, and media platforms specializing in digital assets.
Steven Suhadi, the co-founder and founding member of the consortium, states that:
"Regulators in Indonesia over the past ten years have become adaptable to technological changes, from e-commerce to ride-hailing and, most recently, P2P lending. Indonesia has clearly-defined rules for exchanges and crypto trading already. Over the last 24 months, regulators have taken more proactive steps for digital assets, which will help increase Bitcoin and cryptocurrencies in Indonesia."
As more players enter Indonesia, the nation is set for another boost in virtual currency popularity.
Crypto and blockchain continue to get bigger
Cryptocurrencies and the underlying technology have witnessed global adoption over the past few years. As the industry got mainstream, the chart is yet persisting in showing some substantial spikes.
Coins like Bitcoin evolve over time with Layer-2 solutions like the Lightning Network and the taproot upgrade. More people are looking to make payments or at least hodl one kind of digital currency. If we look across the globe, it is notable that the crypto transactions count is not just rising in Indonesia.
However, besides the lofty transactions count, the number of digital asset traders and cryptocurrency exchanges has surged. Following the scenario, we assume that the digital ecosystem will only thrive in 2022 and beyond.
On the other hand, Non-Fungible Tokens (NFTs) have also recently walked into the limelight in the country after news broke about a computer science student who made more than $1 million on OpenSea through NFT sales. Unsurprisingly, the Indonesian crypto community has been burgeoning with an intense creative scene. And NFTs are driving to the next chapter of the digital journey of the nation.
Regulations, exchanges, and local adoption by the crypto community are making Indonesia an emerging hub for digital assets. However, the nation needs some enhancement in its regulations. Although the nation has been attracting more businesses, a well-regulated crypto community could boost Indonesia beyond the financial sector.
In contrast, the embracement of the digital ecosystem would help the government create jobs, value-add, and enrich their financial infrastructure.