Cryptocurrency Trends in Indonesia Throughout 2021
Throughout the pandemic, which has been the reason for the nationwide economic slowdown, Indonesians have taken a serious interest in investment activities. One can be measured from a significant jump in the number of traders in the past two years, especially in the cryptocurrency trading department. This phenomenon arises primarily due to substantial celebrity endorsers like Elon Musk and influential political figures.
As of 2021, it is said that cryptocurrency holders in Indonesia saw an 85% rise, from 4 million people in 2020 to 7.5 million people and growing. This puts Indonesia in the top 30 countries for cryptocurrency holders in the world. Taking into account the total population, this means that the cryptocurrency holders make up only a little over 2.5% of Indonesia’s population. Since Indonesia is the 4th largest country worldwide, there is still significant room for growth in Indonesia’s finance industry, most notably in the blockchain sector.
The growth of cryptocurrency trading in Indonesia is propelled by the Indonesian Commodity Futures Trading Regulatory Agency (BAPPEBTI) legalizing Bitcoin as a commodity in 2019. Over time, BAPPEBTI continued to legalize several cryptocurrencies in Indonesia as a commodity that can be traded on an official exchange.
How to Trade Cryptocurrency in Indonesia Legally
Indonesia’s Regulation is Catching Up with Cryptocurrency Trends
Trading cryptocurrency in Indonesia has never been easier than in the past two years. All people need to do to join in on the hype is a stable internet connection, a smartphone, and some capital. With the ease of making cryptocurrency investments, a number of crypto exchanges have been sprouting with different deals to make crypto trading even easier and even more accessible. This has led to a rise from USD 4.5 billion in 2020 to USD 50 billion by the end of 2021.
With cryptocurrency regulation in the country having only seen a couple of years of existence, there is still a widespread amount of uncertainties regarding the details. One thing that is certain, the use of cryptocurrencies is purely a tradable product or an investment and not a currency like Rupiah.
Key Points on Cryptocurrency Trading in Indonesia
Any crypto assets that are traded must first obtain a business license under BAPPEBTI following Regulation No. 8 of 2021. Three main points need to be considered in order to be a tradable crypto-asset it must:
- be based on distributed ledger technology;
- be asset-backed or utility-based;
- have been assessed via an Analytical Hierarchy Process (AHP) implemented by BAPPEBTI.
The AHP is based on some considerations, including the coin market cap, involvement of the coin in significant international transactions, the economic value of each coin, and risk assessment. BAPPEBTI has approved 229 tradable crypto assets, including Bitcoin, Ethereum, Ripple, and meme coins such as Dogecoin and Shiba Inu coins.
Once the crypto asset trader conducts the initial requirements, a number of other conditions are to be considered, such as a minimum capital of IDR 80 billion, with maintained equity of IDR 64 billion, and an established company structure made up of 6 divisions as a prerequisite with official trading rules.
Success in registering the business and obtaining a license from BAPPEBTI, crypto-asset transactions listed below can then be facilitated:
- sale and purchase of crypto-assets using Indonesian Rupiah;
- trading between one or more types of crypto-asset;
- storage of crypto-assets owned by the crypto asset subscribers; and
- transfer or assignment of crypto assets between wallets.
All crypto-asset transactions must be reported to BAPPEBTI at the end of every month and conducted in a registered exchange.
A Potential Growth of Cryptocurrency in Indonesia
The growth of cryptocurrency trading in Indonesia has seen a very drastic uphill climb from its early days of negligible numbers of traders. According to the Ministry of Trade, Indonesia has over 6.5 million crypto investors. That number suggests that there are more than the total of retail investors recorded in the stock exchange.
Seeing that only about 40% of Indonesia’s population is invested in cryptocurrency, there is certainly more than ample space for growth in the country. It can be seen by the already accountable growth of the 62% increase in crypto traders from the start of the Covid-19 pandemic to now. This spike is definitely not showing any signs of slowing down. Every data coming out of crypto exchanges in Indonesia states that the country is rapidly adapting and embracing the crypto trends.
Additional data that shows high positivity in future growth is that the number of crypto traders is estimated to be around 18-34 years old, with most of that group being in their late teens. Taking this into account, the future of crypto cannot be more promising.
Indonesia’s Crypto Exchange Market Attracting International Players
With this potential growth, it is common to see international players turning their heads to Indonesia as a future space for crypto trading. This is seen by major crypto trading exchanges like Luno and UpBit, which is part of the prestigious 100 biggest trading platforms in the world, making their way to the country. With government regulations getting friendlier for crypto trading, the 1% number of crypto traders in the country is just the start according to the head of the Blockchain Association in Indonesia.