Crypto is the next big thing in Indonesia. According to the Ministry of Trade, transactions for currencies like Bitcoin (BTC) grew over 14 times from a total of 60 trillion rupiahs ($4.1 billion) in 2020 to a total of 859 trillion rupiahs ($59.83 billion) in 2021.
It’s getting to the point where crypto is becoming more popular than traditional stock. Vice Minister of Trade Jerry Sambuaga stated that more than 11 million Indonesians bought or sold crypto in 2021. In comparison, according to the Indonesian Central Securities Depository, the total number of portfolio investors — indicated by the number of single investor identities — reached 7.35 million in 2021.
Even so, 11 million crypto investors is still only about 4% of Indonesia’s total population, meaning there’s still plenty of room to grow. The crypto community’s growth in Indonesia goes hand-in-hand with several supporting local phenomena, including but not limited to:
Regulatory support from government bodiesIncreased ease of access to cryptocurrency tradingAdoption from major local tech players
Regulators aim to make things more secure
Although crypto assets are still not permitted as payment instruments, companies are welcome to buy and sell crypto as trading commodities in Indonesia. Since 2019, cryptocurrency trading in Indonesia has been officially overseen and regulated by the Commodity Futures Trading Regulatory Agency (BAPPEBTI), a body under the Ministry of Trade.
This governing body is, among other things, in charge of vetting, documenting and approving companies and commodity items allowed to be traded in Indonesia. As of 2021, its whitelist of permitted crypto tokens reached 229 items, including popular assets such as Bitcoin, Ether (ETH), Polkadot (DOT) and Cardano (ADA).
These items are permitted based on BAPPEBTI’s own vetting methods, considering market capitalization rankings as well as security, background checks on the development teams, blockchain system management, and development roadmaps with verifiable success metrics.
In an official statement, the governing body iterated its main objective of providing legal security and protecting the interests of Indonesian crypto consumers. BAPPEBTI stated:
“With the new rules that we had published, it is hoped that we and crypto exchanges in Indonesia could work together to help 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 service companies, such as lending or credit services, from marketing or facilitating crypto trading, reiterating BAPPEBTI’s regulation that all crypto exchanges must be specifically registered with them.
The aforementioned boom in the number of both crypto and stock investors in Indonesia goes hand-in-hand with the rising popularity of fintech apps, such as Bareksa and Ajaib, meaning that a large portion of these new investors might be novices. Tokocrypto, a prominent local crypto exchange, has stated its intent to work together with the government to make trading more secure by helping educate investors about the risks of crypto trading and how to avoid legally dubious exchanges and assets.
Companies that plan to boost crypto adoption in Indonesia would need to build an active and positive working relationship with the government and ensure compliance with all of its regulations to gain local consumers’ trust.
17 registered crypto exchanges in Indonesia
Until March 2022, there have been 17 companies registered and permitted by BAPPEBTI to exchange cryptocurrencies in Indonesia, with their userbases rapidly increasing. A market leader, Indodax reported reaching 5 million members in 2022, a 104% increase compared to 2021. Another prominent exchange, Tokocrypto, had reported reaching 2 million members by the end of 2021, an eightfold increase compared to 2020.
As mentioned above, a large contributing factor to these platforms’ success is their mobile-first strategy, with easily accessible apps. With Indonesia’s internet penetration standing at 73.7% in 2021, it’s no wonder that there’s more traction from the country’s mobile-heavy user base.
Indonesia’s crypto community is also growing beyond just exchanges. The Indonesia Blockchain Association, a local consortium and advocacy group for blockchain and cryptocurrencies, has 28 member companies and organizations as of 2022. The association comprises not only exchanges but also startups and tech companies using blockchain in their ecosystem and media platforms specializing in crypto.
Steven Suhadi, co-founder of Indonesia Crypto Network and founding member of the Indonesia Blockchain Association, told Cointelegraph, “Regulators in Indonesia over the past 10 years have become adaptable to technological changes, from e-commerce to ride-hailing and, most recently, P2P [peer-to-peer] lending. Indonesia has clearly-defined rules for exchanges and crypto trading already. Over the last 24 months, regulators have taken more proactive steps for digital assets, which will help to proliferate Bitcoin and cryptocurrencies in Indonesia.”
More supply means more demand, and with more players entering the country, the stage is set for another boost in crypto’s 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’s portfolio boasts several companies that have gone on to become household names in Indonesia, including financial technology leaders Kredivo and KoinWorks.
Binance founder and CEO Changpeng Zhao has expressed his confidence and objectives regarding crypto in Indonesia, stating, “With fast technology adoption and strong economic potential, Indonesia could become one of the leading centers of the blockchain and crypto ecosystem in Southeast Asia.”
This sentiment was repeated by MDI CEO Donald Wihardja, who stated, “Cryptocurrencies, crypto assets, and the underlying technology, blockchain, present an undeniably important part of the financial and other digital infrastructures in the future.”
It’ll be worth keeping a close eye on this partnership in the future, but right now, it can be considered a sign that crypto is no longer a niche market in Indonesia. More mainstream players have started moving into it, which could mean more resources and momentum to increase adoption.
What’s next for Indonesia?
With the rising trend in transaction volume and the number of traders as well as exchanges in recent years, we can assume that crypto and blockchain will only get bigger in 2022 and beyond. Nonfungible tokens (NFT) recently stepped into the spotlight in Indonesia after news broke about Ghozali, a computer science student who made over $1 million from selling NFT selfies on OpenSea. With Indonesia’s burgeoning crypto community and already vibrant artistic scene, NFTs might be the latest chapter in Indonesia’s crypto journey — either way, it’s become an emerging market to watch out for.
Reporting by Diaz Praditya.