Cryptocurrency has now become one of the favourite investment instruments in Indonesia. Not only that, but cryptocurrencies are also rapidly developing into alternative non-cash transactions, such as remittances and cross-border transactions.
After more than a decade, there are now hundreds if not thousands of cryptocurrencies in circulation. Although it is undeniable, the charm of bitcoin is still number one. It is stated in CoinMarketCap, that as of December 18, 2021, bitcoin’s market capitalization is US$868 billion.
Based on the Bank Indonesia (BI) report in the KSK Book published every semester, the number of crypto asset investors is estimated to have reached around 6.5 million by June 2021. This number exceeds the number of investors in the stock market which reached around 2.4 million. This number encourages many digital asset traders to target Indonesia as a fertile field.
One of them is from the cryptocurrency trading platform, Binance Holding Ltd. Binance is rumoured to be setting up a cryptocurrency stock exchange in Indonesia. As the world’s largest stock exchange company, Binance is partnering with PT Telkom and BCA to expand the adoption of cryptocurrencies in Indonesia. Because, as a country that has the fourth most populous population in the world, Indonesia is considered to have great potential for the development of cryptocurrencies.
The Legality and Potential of Crypto Asset Development
From the side of public policymakers, the Head of the Commodity Futures Trading Supervisory Agency (CoFTRA), Tjahya Widayanti emphasized that crypto assets are not used as a means of payment. But as an investment instrument that can be included as a commodity and can be traded on the futures exchange.
This is based on Law no. 7 of 2011 concerning Currency and Law no. 23 of 1999 issued by Bank Indonesia. The regulation explains that cryptocurrencies are not currencies issued by the Republic of Indonesia. The regulation aims to provide legal certainty for crypto asset trading business actors in Indonesia.
In addition, it also protects crypto-asset customers from possible losses, facilitates innovation, growth, and development of crypto asset physical trading business activities in Indonesia. The existence of regulations in crypto assets also helps prevent the misuse of crypto assets such as money laundering, financing terrorist acts, developing illegal weapons of destruction, and other crimes.
The government sees the growth of crypto-asset trading both in Indonesia and in the world as very dynamic. This raises optimism for better crypto-asset developments in the future. This is in line with the Indonesian people who are beginning to be financially literate and the latest technological developments. Cryptocurrencies use blockchain technology that is decentralized, transparent and global. Transactions using cryptocurrencies on a blockchain network are believed to be a solution to various problems faced by conventional financial systems.
Cryptocurrency regulations have been regulated by CoFTRA through CoFTRA Regulation No. 5 of 2019, cryptocurrency assets are recognized as tradable commodities on futures exchanges. This regulation makes the cryptocurrency industry has a clear legal umbrella and is growing in Indonesia.
The Regulation of the Head of CoFTRA Number 5 of 2019 concerning Technical Provisions for the Implementation of the Physical Crypto Asset Market on the Futures Exchange explains that crypto assets are intangible commodities in the form of digital assets that use cryptography, peer-to-peer networks, and distributed ledgers to manage the creation of new units, verify transactions, and secure transactions without the intervention of other parties.
In addition, the Ministry of Trade (Kemendag) through Jerry Sambuaga said that the Ministry of Trade would set up a crypto exchange by the end of the year. In its implementation, the crypto exchange will later be regulated by the Futures Trading Regulatory Agency (CoFTRA). He also said that the domestic crypto community is mushrooming. So, if a domestic crypto exchange is formed, Indonesia will be the first country with a government that regulates crypto exchanges.