Indonesia plans to introduce a cryptocurrency exchange in 2023 amid wider financial sector reform. The platform will be launched before a shift of regulatory power from commodities to the Financial Services Authority (FSA).
In Indonesia, crypto trading control has been under the control of the Commodity Futures Trading Regulatory Agency (Bappebti). There are already 10 local coins and 383 cryptocurrencies trading in Indonesia, while an additional 10 coins and 151 assets are under Bappebti’s supervision.
The FSA will take charge of Bappebti after the crypto exchange launch this year, said Bappebti’s acting head, Didid Noordiatmoko, on Jan 4. The FSA will take over the regulation of cryptocurrency assets over the next two years.
The plan to establish a crypto exchange has been delayed many times in the past two years. The government initially wanted to establish the platform in 2021, then postponed it to the first quarter of 2022 but could not do so due to complications in the process.
However, the move seems to be giving widespread support to the growth of cryptocurrency in Indonesia, the world’s fourth-largest country. The Indonesian government has also indicated that it sees cryptocurrencies as a potential threat to its financial system.
Elaborating on the shift of authority from Bappebti to the FSA, the director of risk management and financing of the national finance ministry, Suminto Sastro Suwito said:
“In fact, crypto assets have become investment and financial instruments, so they need to be regulated on an equal basis with other financial and investment instruments.”
The country’s central bank, Bank Indonesia (BI), issued a white paper on December 1. This represents their approach to Central Bank Digital Currency (CBDC) in response to the increasing influence of digital assets in the country. The report also warned that stablecoins and unbacked crypto-assets could raise terrorist financing and the risk of money laundering.
Perry Warjiyo, Bank Indonesia governor, wrote:
“The future of the central bank is at a crossroads. Digital innovations may not only disrupt the banking system, but on a more pervasive scale, the possible disruptions on official currencies and central banking triggered by the advent of stablecoins and unbacked crypto assets.”
Some experts said the “Digital Currency Area” could result from these assets. This will put pressure on the international financial system and discredit central banks.
Although there are concerns about competition between the rupiah (the official currency of Indonesia) and cryptocurrencies, digital assets have found significant support in Indonesia.
Indonesian’s Crypto Market Growth
Despite the crypto disaster of 2022, Indonesia’s crypto market is still growing steadily as new investors enter and make profits. According to the data, the country recorded 11.2 million crypto investors at the end of 2021. While in the first 11 months of 2022, the figure reached 16 million.
Over the past two years, Indonesia’s crypto exchanges and user base have grown exponentially. Leading crypto exchange, Indodax, is up 100% from 2021 and recorded 5 million users in 2022. Also, Tokocrypto has grown its user base to 2 million by the end of 2021.
However, along with the expansion of the crypto market, the volume of crypto trading in the country has also decreased in the past year. It shrunk from 859 trillion rupiahs ($25.8 billion) recorded in 2021 to 300 trillion rupiahs ($19.2 billion).