Indonesia to Launch Crypto Exchange This Year as Regulatory Powers Shift to Financial Services Authority
Indonesia plans to launch a crypto exchange in 2023 amid a financial sector reform that will see a shift in regulatory powers over digital assets to the Financial Services Authority.
Didid Noordiatmoko, head of the Commodity Futures Trading Regulatory Agency of Indonesia (Bappebti), said the government will set up an exchange before the Financial Services Authority will take over the supervision of crypto from a commodities agency, Bloomberg reported on Wednesday.
As of now, cryptocurrencies are traded alongside commodity contracts under the supervision of the Commodity Futures Trading Regulatory Agency in Indonesia.
Notably, plans to launch the crypto exchange has been postponed several times over the past couple of years. The government initially intended to launch the platform in 2021 but couldn’t meet that deadline due to complexities in the process.
In September last year, the country’s deputy trade minister Jerry Sambuaga said they aim to launch the crypto stock market by the end of 2022. “We will make sure that every requirement, procedure, and necessary step have been taken,” he said at the time.
Indonesia has long been supportive of crypto assets. Indonesia’s Ministry of Trade formally authorized crypto asset trading and recognized cryptocurrency as a commodity back in 2018.
Later in 2019, the Indonesian Commodity Futures Trading Supervisory Authority, or Bappebti, provided a thorough regulatory framework for the crypto-assets future. In short, buying and selling crypto assets are authorized in Indonesia, but only for investment reasons.
The number of crypto investors in Indonesia has also been on an uptrend. There were a total of 11.2 million crypto investors in Indonesia at the end of 2021, which increased to 16 million in the first 11 months of 2022.
However, alongside the broader crypto market downturn, crypto trading volume in the country also took a hit last year. In 2022, trading value shrank to about 300 trillion rupiah ($19.2 billion), a fraction of the 859 trillion rupiah seen in the previous year.
Notably, Bappebti stopped issuing registration certificates for prospective crypto asset traders starting August last year. The move was aimed to realize “transparent, efficient, and effective trading activities of crypto assets with fair competition to protect the interests of all parties in the crypto trading market.”
There are currently around 25 licensed crypto exchanges operating in Indonesia. One of the exchanges is Zipmex, which suspended withdrawals in the country last year and has been preparing a recovery process.
Meanwhile, a new report by CFA Institute claims that crypto assets need a clear regulatory framework in order to gain mainstream adoption. Olivier Fines, CFA, Head of Advocacy at CFA, said:
“A strong regulatory framework needs to be established for the benefit of both crypto providers and users. Policymakers must either agree on the application of existing laws to various components in the crypto ecosystem or craft new laws to fill in any gaps. Trust in the integrity of crypto markets is essential to attract investors and build crypto networks to scale.”