Despite its popularity and multi-dimensional utility, cryptocurrency still has a long way to go before attaining full global adoption. Its status as a controversial asset lies in the fact that economic and finance experts are unsure whether it is a security or a commodity. In addition, various scenarios involving high-profile hacks of exchange platforms have done little to prod governments down the path of regulation and eventual adoption. However, slow progress continues to be made. In countries like Indonesia, where crypto is partly banned, steps are being taken to consolidate crypto’s place in the national economy.
A History of Crypto Regulations
Several years after Bitcoin’s pioneering entry into the crypto market, there was no government concern over the need to regulate crypto. The crypto space was an open one where any brilliant developer looking to provide unique blockchain solutions could go on to launch projects. However, as cryptocurrencies rapidly went mainstream, it became clear that some form of regulation would be realised. Electroneum became the first crypto to become AML and KYC-compliant in 2018. Also, Japan soon became the first country to introduce a series of crypto regulations due to multiple hacks in the industry.
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Crypto Bans, Experiments and the Asset Debate
Despite its popularity, many countries worldwide, including Algeria, Bolivia, Ecuador, Egypt and Taiwan, have issued partial or total crypto bans. Part of this stems from crypto not being a clearly defined asset. Its decentralised nature makes it hard to have any control over its distribution and creation. Nevertheless, in the past, countries like El Salvador have experimented with legalising Bitcoin. In the case of El Salvador, various factors contributed to the scheme crashing. However, countries like the US are making concrete steps towards full adoption. The first step, however, is to define the asset class, which is something that the Securities Exchange Commission has been working on for a long time.
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Crypto Adoption in Indonesia
While cryptocurrency is not legal tender in Indonesia, the country’s citizens are some of the world’s most crypto-enthusiastic populations. The country has a high rate of crypto asset adoption, with nearly half of the population owning crypto assets. Indeed, many surveys indicate that many people in the country see crypto as a way to hedge against rising inflation in fiat currency. The Commodity Futures Trading Regulatory Agency (Bappebti) is currently responsible for overseeing digital assets, but plans are underway to shift the duty to the Financial Services Authority by 2024. Perhaps, more significantly, the country has launched its national crypto exchange, a sure sign of impending total adoption.
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Indonesia’s National Exchange and Binance’s Tokocrypto
Indonesia recently launched its own national crypto asset bourse to provide regulators with accurate transaction records and protect the interests of crypto investors. The nation’s new crypto exchange has also announced the listings of Binance’s Tokocrypto and Indodax. Further crypto listings are expected in the near future. The launch has been made necessary due to the surge in crypto investments in Indonesia, with 18 million investors quoted as of June 2023. As a result, the government has taken definitive steps to protect the interests of the rapidly increasing number of investors.
Conclusion
Indonesia’s approach to crypto adoption is exemplary by global standards. Plans to establish a national crypto asset bourse have been in the works since 2021, with various delays preventing the scheme from taking off. Finally, to the benefit of the country’s millions of crypto investors, it has been launched, and popular tokens like Binance’s Tokocrypto and Indodax have been added. While crypto may not yet be legal tender in Indonesia, its dominance in national finance will soon peak.
Frequently Asked Questions
How Popular Is Crypto in Indonesia?
Although Indonesia banned crypto payments in 2021, the country has seen a surge in crypto investments over the past two years, with about 18 million local investors as of June 2023. This figure is more significant than its stock exchange equivalent, pointing to a high level of crypto popularity in the country.
Will Indonesia Legalise Crypto?
Although full legal adoption is still some years away, definitive steps have been taken to regulate the use of cryptocurrencies as they pertain to transactions. The new national crypto asset exchange has been launched to protect the interests of investors and help regulators monitor and track the flow of crypto-based transactions in the country.
What Is the Future of Crypto Trading in Indonesia?
Despite crypto’s overwhelming popularity, several economic factors, including inflation and rising global interest rates, have reduced the enthusiasm for crypto among investors. For context, crypto transactions dropped by nearly 70% between January and June compared to its 2022 equivalent. This has affected the demand for some of Indonesia’s most popularly traded crypto assets, including XRP, BNB, and ETH.