Whither the regulators? Indonesia’s blockchain domination unstoppable

blockchain Indonesia
Image by peshkov | Image by Pixelvario | Bigstockphoto

With its young population and mobile penetration rate of over 100%, Southeast Asia is fast becoming a favourite among crypto and blockchain innovators. And rightly so. The region is already a burgeoning tech hotspot, with unicorns such as Grab, SEA, and Lazada contributing to the US$110 billion ecosystem.

In Indonesia, home to unicorns Gojek, Tokopedia, Traveloka, and Bukalapak, the value of crypto-asset trading hit US$4.44 billion in 2020. Indonesia’s Minister of Trade Muhammad Lutfi also revealed that the value of crypto trading in Indonesia increased five-fold to US$25.5 million in just the first half of 2021.

However, Indonesia remains at a standstill in using cryptocurrency for payments. While neighbouring country Singapore has rolled out policies, grants, and programs to support crypto and blockchain innovation, the Indonesian central bank still prohibits the use of crypto for transactions. Cryptocurrencies are, for now, treated as an asset or commodity traded on exchanges like Indodax.

The government is slow but steady in monitoring the tremendous growth of cryptocurrencies in the country and the openness of Indonesians to grow their money through digital assets.

Regulation No.7/2020, effective from 30 December 2020, provided an official list of 229 cryptocurrencies allowed for trading within Indonesia. This list, which includes Bitcoin and Ethereum, is a major development for crypto traders, who previously did not have clear criteria for crypto trading.

The regulation may have also played a role in encouraging more Indonesians to trade cryptocurrencies with confidence. In April, when the price of Bitcoin and other crypto-assets broke record highs, Indodax reported that the number of active members on its platform reached three million.

As regulators come to terms with the rise of crypto and traders find themselves more engaged in the space, local technopreneurs also have no reason to stop.

Just two days ago, Tokocrypto led the first crypto outlook event for Asia-Pacific, where the region’s crypto leaders mapped out the potential for blockchain in Indonesia and Southeast Asia. Tokocrypto is Indonesia’s biggest Binance-backed exchange, with plans to go public within the next two to three years.

Meanwhile, in May, reports showed that Jakarta-based Pintu, a cryptocurrency exchange, received US$6 million in a Series A funding round led by Pantera Capital and Intudo Ventures. Another cryptocurrency exchange, Luno, is expected to enter the Southeast Asian market, with Indonesia as one of its regional centres.

The Indonesian Blockchain Association is also preparing for this year’s Indonesian Blockchain Conference scheduled for the first week of August. The conference will gather hundreds of blockchain and crypto leaders and users and government regulators, and local thought leaders to help set the stage for greater blockchain and cryptocurrency adoption in the country.

Indonesia’s overall outlook for cryptocurrencies is positive, as the government itself announced the roll-out of a blockchain-based payments and savings platform hinged on precious metals like gold. Regulators may soon transform their policies around this initiative, which is part of the government’s drive towards greater financial inclusion.

For now, Indonesia’s crypto space will continue to grow, and regulators, in fear of money laundering and terrorism financing, will have to plan new regulations that encourage the growth of crypto while preventing misuse and protecting traders.

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