Indonesia’s Crypto Industry in 2021: A Kaleidoscope

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In 2021, the num­ber of glob­al cryp­to hold­ers has been esti­mat­ed to have increased by 3.9% to more than 300 mil­lion cryp­to users world­wide, with more than 18,000 busi­ness­es already accept­ing cryp­tocur­ren­cies as pay­ment. India is cur­rent­ly in the lead with 100 mil­lion users, fol­lowed by the Unit­ed States with 27 mil­lion users and Rus­sia with 17 mil­lion users.

Accord­ing to data from Triple A, Indone­sia has the sev­enth-largest cryp­to user base, below Brazil and Pak­istan. It is esti­mat­ed that there are 7.2 mil­lion Indone­sians who own cryp­tocur­ren­cies, while accord­ing to the Indone­sian Blockchain Asso­ci­a­tion, as of July 2021, the num­ber of cryp­to own­ers in Indone­sia is 7.4 mil­lion peo­ple, an increase of 85% from 2020. This num­ber is sig­nif­i­cant­ly more than the num­ber of stock investors in Indone­sia with only 2.7 mil­lion investors, based on data from the Indone­sia Stock Exchange.

The total pop­u­la­tion of Indone­sia in June was 272 mil­lion peo­ple, which means that only 2.7% of the Indone­sian pop­u­la­tion owns cryp­to. This shows that there is still room for the cryp­to indus­try to grow, devel­op and reach more cor­ners of Indone­sian society.

The rapid growth of cryp­to investors in Indone­sia is part­ly the result of Indone­sian reg­u­la­tors that have wel­comed cryp­to and blockchain devel­op­ments with open arms. Through­out 2021, there have been many dis­cus­sions with offi­cials, new cryp­to reg­u­la­tions and devel­op­ments in the sector. 

Accord­ing to Dhi­la Rizqia, head of growth at local indus­try media firm Coin­ves­tasi, the grow­ing num­ber of Indone­sian cryp­to investors is also reflect­ed in the rise of the cryp­to media. “In 2021, Coin­ves­tasi has gained a lot of new audi­ences across our chan­nels, includ­ing Insta­gram and YouTube which have grown over 1,787% and 1,388%, respectively.”

2021 has been an incred­i­ble ride for cryp­tocur­ren­cies, in this arti­cle we’ll take a look at the hottest trends in the Indone­sian cryp­to indus­try last year.

Whitelist of legal digital assets

Bit­coin (BTC) is legal in Indone­sia as a com­mod­i­ty and can be trad­ed on cryp­to exchanges. Ear­ly this year, the Com­mod­i­ty Futures Trad­ing Reg­u­la­to­ry Agency (BAPPEBTI) issued a whitelist of legal cryp­to assets for trad­ing in Indonesia. 

This whitelist con­sists of 229 cryp­to assets, includ­ing Bit­coin, Ether (ETH), Polka­dot (DOT), Car­dano (ADA) and the pop­u­lar meme­coin Doge­coin (DOGE), that are allowed for trad­ing on reg­is­tered exchanges. 

These cryp­to assets are select­ed by two approach­es: The first is a juridi­cal approach which looks at the top 500 coins based on mar­ket cap in accor­dance with the pro­vi­sions in reg­u­la­tion Num­ber 5 of 2019. 

The sec­ond is through a process of hier­ar­chy analy­sis, where­in BAPPEBTI assess­es the secu­ri­ty aspects, pro­files of the founders and devel­op­er team, blockchain sys­tem gov­er­nance, blockchain sys­tem scal­a­bil­i­ty, roadmap and its ver­i­fi­able progress. 

Crypto taxation

With the growth of cryp­to users and investors in Indone­sia, the gov­ern­ment, through BAPPEBTI and the Direc­tor Gen­er­al of Tax­es, is also con­sid­er­ing impos­ing tax­es on cryp­to trad­ing. For now, cryp­to tax­a­tion is still under dis­cus­sion with sev­er­al mar­ket play­ers such as exchanges and indus­try associations. 

BAPPEBTI stat­ed that the cryp­to tax in Indone­sia could be around 0.05%, low­er than the 0.1% tax imposed on stock trades.

Mean­while, the gov­ern­ment has report­ed­ly begun to dis­cuss an income tax for investors in cryp­to assets of 0.03%. 

Crypto is haram

The ques­tion of Bit­coin and cryp­to assets being halal (per­mis­si­ble) or haram (for­bid­den) under Islam­ic law has been a long and heat­ed debate. As a coun­try with a major­i­ty Mus­lim pop­u­la­tion, the top­ic is of par­tic­u­lar impor­tance for Indonesia.

In Octo­ber, the East Java branch of one of Indonesia’s largest Islam­ic orga­ni­za­tions ruled that while the gov­ern­ment may approve of cryp­tocur­ren­cies, they can­not be con­sid­ered halal “based on sev­er­al con­sid­er­a­tions, includ­ing the preva­lence of fraud, it is con­sid­ered unlawful.”

Less than one month lat­er, the Nation­al Ule­ma Coun­cil (MUI) — Indonesia’s top Islam­ic schol­ar­ly body — found cryp­tocur­ren­cies to be haram due to alleged ele­ments of “uncer­tain­ty, wager­ing and harm.”

Fur­ther­more, the trad­ing of cryp­to as a dig­i­tal commodity/asset did not meet oth­er require­ments of Islam­ic finan­cial law because, accord­ing to the MIU, it lacked nec­es­sary ele­ments such as hav­ing a phys­i­cal form, hav­ing val­ue, being pro­pri­etary and able to be hand­ed over to the buyer. 

NFTs find support from celebrities to the governor 

The devel­op­ment of non­fun­gi­ble tokens (NFTs) in Indone­sia took off in 2021, espe­cial­ly after Rid­wan Kamil, the Gov­er­nor of West Java, jumped on this trend by invit­ing artists from West Java to cre­ate and pro­mote their art as NFTs to be trad­ed on NFT plat­forms such as OpenSea. 

Indone­sian singer Syahri­ni sold 17,800 NFTs for 20 Binance USD (BUSD) or around 286,300 rupi­ahs per NFT on the Binance NFT exchange, net­ting the singer a total income of around 5.1 bil­lion rupi­ahs, or $356,000.

There is also chef Arnold Poer­nomo, a celebri­ty chef who also cre­at­ed his own NFT and pro­mot­ed it on Twitter.

Exchange tokens

Exchange-issued tokens such as Binance Coin (BNB) and FTX Token (FTT) can be used by hold­ers to get ben­e­fits pro­vid­ed by the exchange such as dis­counts on deposits, no with­draw­al fees, oppor­tu­ni­ties to par­tic­i­pate in pro­mo­tion­al activ­i­ties and so on. 

Indone­sian local exchanges began to issue their own such tokens in 2021, with Tokocryp­to releas­ing Toko Token (TKO) in col­lab­o­ra­tion with Binance on Binance Launch­pad. From the begin­ning of this year’s list­ing, TKO has increased by over 1,000%.

Domes­tic cryp­to exchange PINTU launched its Pin­tu Token (PTU) in Novem­ber, which is now avail­able on var­i­ous exchanges such as Bybit and FTX and is also sup­port­ed by lead­ing investors like Light­speed, Coin­base and Pantera.

With two local exchanges launch­ing their own native tokens in 2021, it will be inter­est­ing to see if oth­er exchanges such as Indo­dax, Reken­ingku or Triv fol­low suit in 2022.

Binance partners with largest Indonesian telco

To cap off the year Binance part­nered with a sub­sidiary of Telkom Indone­sia, MDI Ven­tures, to cre­ate a new exchange.

With­in the col­lab­o­ra­tion, Binance will pro­vide infra­struc­ture and asset man­age­ment tech­nol­o­gy to sup­port the devel­op­ment of a cryp­to-asset exchange plat­form, which will be a joint ven­ture between the two firms.

Don­ald Wihard­ja, the CEO of MDI, said that the part­ner­ship will help advance cryp­to and blockchain, which he believes are the finan­cial sys­tems of the figure.

With a friend­ly reg­u­la­to­ry atmos­phere, sup­port and part­ner­ships from glob­al cryp­tocur­ren­cy firms, and grow­ing inter­est in dig­i­tal asset trad­ing, it will be inter­est­ing to see how the indus­try con­tin­ues to devel­op in 2022.



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