The role of crypto exchanges in Indonesia’s economic growth
The crypto exchange has become a massive phenomenon in Indonesia and other parts of the world. Thousands of traders are looking for the best crypto exchange Indonesia to trade and invest in digital currencies. It is a promising sector that has witnessed a substantial growth of more than 14 times, from 60 trillion rupiahs in 2020 to 859 trillion rupiahs in 2021, in terms of crypto transactions.
The country is all set to establish a national cryptocurrency exchange Indonesia for 2023. However, this does not mean that the Indonesian government is launching a competitor to the Binance exchange cryptocurrency, Indonesia. The news was released by the central bank in 2022 on CBDC (Central Bank Digital Currency). Although cryptocurrencies are forbidden in Indonesia as a mode of payment, Indonesia cryptocurrency exchange still remains legal for trading purposes. The country is set to offer a stronger focus on reliable and legal Indonesia crypto exchanges.
This article will focus on the role of crypto exchanges in Indonesia’s economic growth and the government policies and regulations surrounding them.
Cryptocurrency Market in Indonesia
The economic impact of cryptocurrencies in Indonesia cannot be underestimated. The country has an extremely strong link with other nations that have made cryptocurrency a legal currency and payment method. Although digital assets are not allowed as a payment instrument in Indonesia, many companies have started to buy and sell crypto assets in various Indonesia crypto exchanges.
Since 2019, crypto trading in the country has been officially regulated and overseen by the Commodity Futures Trading Regulatory Agency (BAPPEBTI), a monitoring authority under the Indonesian Ministry of Trade. Cryptocurrency exchange Indonesia is permitted based on the governing body’s vetting methods, monitoring of the market, capitalization rankings, security, blockchain system management, background checks on the team of developers, and roadmaps with verifiable metrics.
The Financial Service Authority (FSA) is another regulatory body that has prohibited all financial companies from facilitating or marketing crypto trading. This reiterates the regulation of BAPPEBTI that all exchange crypto Indonesia must be registered with them in order to operate legally.
Role of Crypto Exchanges
Crypto exchanges have both good and adverse impacts on an economy. Cryptocurrencies were developed to revolutionize the entire financial infrastructure, but like every revolution, there are some trade-offs involved. In the current phase, Indonesia cryptocurrency exchanges have had a substantial impact on the economy as it has created employment, investment opportunities, and great potential for financial inclusion. Digital currencies are a decentralized paradigm for fiat currency. Crypto exchanges eliminate all possibilities of any failure that can set off an array of crises in the country and around the world, for instance, the 2008 failure of the centralized institutions in the US.
The crypto market in Indonesia has made it easy to transfer funds directly between parties involved without requiring any trusted third-party agents like credit card companies, banks, or other financial institutions. Decentralized transfers are protected with private and public keys and other forms of systems like proof of stake or proof of work. Crypto trading allows users to generate profits. With this, the crypto market in Indonesia has skyrocketed in value over the last few years. However, like every coin has two sides; exchange cryptocurrency Indonesia has also faced many challenges, liquidity struggles, lack of Fiat payments, and irreversible transactions.
Government Policies and Regulations
The trade ministry in Indonesia has plans to issue new regulations governing crypto exchanges, which require 2/3rd of the board of commissioners and directors to be citizens of the country. Crypto exchanges in Indonesia that are credible and meet all the requirements of the Commodity Futures Trading Regulatory Agency will receive permits to provide crypto trading services. With the rising transactions, number of trades, crypto exchanges, and traders in recent years, crypto and blockchain networks will only get bigger in 2023 and beyond. In 2022, there were 17 registered companies authorized by BAPPEBTI to exchange cryptocurrency Indonesia, with registered users rapidly increasing.
There have been several advancements and changes in the crypto realm, leading to an expansion of the crypto network in Indonesia. On the one hand, Indonesia cryptocurrency exchanges are going mainstream in the economy and becoming institutional leaders. On the other hand, Indonesia cryptocurrency exchanges will lose a part of their appeal when they are controlled and regulated, just like equities and commodities.
Potential for Growth
Indonesia has projected a strong growth of almost 5.2%, out of which cryptocurrencies have had significant contributions. With the new rules and regulations in the country, it is expected that traders and Indonesia crypto exchange experts can come together to help ensure that crypto transactions are legally regulated and secure for traders in the country. The boom in the number of crypto investors has led to the rising popularity of several fintech apps. This implies that a large portion of the population has turned to crypto trading recently. Many companies plan to boost crypto adoption on a massive level, and this would require further positive and active working relationships with the government to ensure full compliance with all regulations to gain trust among Indonesian traders.
With the rising trends in trade volumes and the number of crypto traders in recent years, cryptocurrency and blockchain networks are expected to expand. NFTs, or non-fungible tokens, have recently stepped into the limelight in the country after the Ghozali news, which made more than $1 million by selling NFT selfies. With the burgeoning cryptocurrency exchanges, and thousands of novice and professional traders looking for more platforms to trade and invest in cryptocurrencies, it has become an emerging market that the Indonesian government should watch out for in terms of more stringent rules and regulations.