The Indonesian Cryptocurrency Community in 2022: An Overview

Crypto is the next big thing in Indonesia. According to the Ministry of Commerce, transactions for currencies like Bitcoin ( BTC ) grow...

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

It is getting to the point where crypto is becoming more popular than traditional stock. Deputy Trade Minister Jerry Sambuaga declared that more than 11 million Indonesians bought or sold crypto in 2021. In comparison, according to Indonesia’s central securities depository, the total number of portfolio investors – indicated by the number of unique investor identities – hit 7.35 million in 2021.

Even so, 11 million crypto investors still only make up about 4% of Indonesia’s total population, which means there’s 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 agencies
  • Increased ease of access to cryptocurrency trading
  • Adoption by major local tech players

Regulators aim to make things safer

Although crypto-assets are still not allowed as payment instruments, businesses are encouraged to buy and sell cryptocurrencies as commercial commodities in Indonesia. Since 2019, cryptocurrency trading in Indonesia is officially supervised and regulated speak Commodity Futures Trading Regulatory Agency (BAPPEBTI), a body under the Ministry of Commerce.

This governing body is, among other things, responsible for monitoring, documenting and approving companies and commodities that are allowed to be traded in Indonesia. From 2021, its whitelist authorized crypto tokens reached 229 items, including popular assets such as Bitcoin, Ether (ETH), Peas (POINT) and Gimbal (ADA).

These are allowed based on BAPPEBTI’s own verification methods, considering market capitalization rankings as well as security, development team background checks, blockchain system management and roadmaps development with verifiable measures of success.

In an official statement, the governing body iterative its main objective to provide legal certainty and protect the interests of Indonesian crypto consumers. BAPPEBTI said:

“With the new rules we had released, we hope that we and the 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, has specifically prohibited financial services companies, such as lending or credit services, to market or facilitate crypto trading, reiterating BAPPEBTI’s regulations that all crypto exchanges must be specifically registered with them.

The aforementioned boom in the number of crypto and stock investors in Indonesia goes hand in hand with the growing popularity of fintech apps, such as Bareksa and Ajaib, which means that a large portion of these new investors could be novices. Tokocrypto, a major local crypto exchange, has declared its intention to work with the government to make trading safer by helping to educate investors about the risks of crypto trading and how to avoid legally questionable exchanges and assets.

Companies considering driving crypto adoption in Indonesia should establish an active and positive working relationship with the government and ensure compliance with all of its regulations to gain the trust of local consumers.

17 Registered Crypto Exchanges in Indonesia

Until March 2022, there have been 17 companies registered and licensed by BAPPEBTI to trade cryptocurrency in Indonesia with their user bases growing rapidly. Market leader Indodax said it has achieved 5 million members in 2022, a 104% increase from 2021. Another major exchange, Tokocrypto, had reported reaching 2 million members end of 2021, an eightfold increase compared to 2020.

As mentioned above, an important factor contributing to the success of these platforms is their mobile-first strategy, with easily accessible apps. Indonesia’s Internet penetration rate stands at 73.7% in 2021, it’s no wonder there’s more traction from the country’s mobile user base.

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

Steven Suhadi, co-founder of Indonesian crypto network and a founding member of the Indonesia Blockchain Association, told Cointelegraph, “Over the past 10 years, Indonesian regulators have been adapting to changes in technology, from e-commerce to ride-sharing and, more recently, P2P. [peer-to-peer] ready. Indonesia already has clearly defined rules for crypto exchanges and trading. Over the past 24 months, regulators have taken more proactive steps for digital assets, which will help Bitcoin and cryptocurrencies proliferate in Indonesia.

More supply means more demand, and with more players entering the country, the stage is set for a further surge in crypto 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. MDI wallet has several companies that have become household names in Indonesia, including fintech leaders Kredivo and KoinWorks.

Binance Founder and CEO Changpeng Zhao expressed his confidence and goals regarding crypto in Indonesia, indicating“With rapid technology adoption and strong economic potential, Indonesia could become one of the leading centers for 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, are an undeniably important part of financial and other digital infrastructure in the future.”

It will be worth watching this partnership closely in the future, but for now, it can be seen as a sign that crypto is no longer a niche market in Indonesia. More and more mainstream players have started getting into it, which could mean more resources and momentum to increase adoption.

What’s next for Indonesia?

With the upward trend in transaction volume and number of merchants as well as exchanges in recent years, we can assume that crypto and blockchain will only get bigger in 2022 and beyond. Non-Fungible Tokens (NFTs) recently came into the spotlight in Indonesia after the announcement by Ghozali, a computer science student who earned over a million dollars selling NFT selfies on OpenSea. With Indonesia’s booming crypto community and an already vibrant art scene, NFTs could be the final chapter in Indonesia’s crypto journey – either way, it’s become an emerging market to watch.

Reporting by Diaz Praditya.