In line with existing laws, regulatory bodies in Indonesia have pledged not to impose a blanket ban on cryptocurrencies. According to Minister of Trade in Indonesia, Muhammad Luthfi, the Indonesian government will not be outlawing crypto assets. However, purchases with cryptocurrencies will not be accepted in the country.
Minister Luthfi revealed that the government is also concerned with preventing the use of cryptocurrencies for criminal activities. Although crypto trading is legal in Indonesia, the country’s apex bank is against using digital currencies to purchase goods and services.
Indonesia Authorities Complain About Volatility in Cryptocurrencies
The Indonesian government has also remained resolute on the volatile nature of cryptocurrencies tagging them a volatile asset class with little or zero backing. Indonesia legalized crypto trading in 2018 via the Ministry of Trade Regulation No. 99 of 2018. According to reports, investors in the region trade digital assets in the spot market such that they wait for the prices of cryptocurrencies to increase before making attempts to sell.
Both the Indonesian constitution and the laws of its central bank do not recognize cryptocurrencies. However, authorities have revealed plans to issue a central bank digital currency. Also, plans for a crypto exchange owned by the government are in motion, the Ministry of Trade and Industry has confirmed.
Interestingly, crypto adoption in Indonesia is increasingly growing. This has contributed to the increase in transaction volumes over the last year and 6 months. As of 2020, Indonesia’s transaction volume is estimated to have hit $4.5 billion. Within the first five months of this year, the volume of crypto transactions in the country surged by 40%.
According to regulations, homegrown exchanges such as Pintu and Luno Indonesia are required to have a server with five-year trading history. The regulations also provide that they must employ at least one security expert.
Crypto Exchanges Report Increase in User Base
Exchanges based in Indonesia have also witnessed increases respectively in their user base following the fast-paced crypto adoption. As of September, Luno Indonesia reported that the number of active accounts on its platform had risen to 700k with a potential for more growth. In April 2021, self-acclaimed largest exchange in the region Indodax reported a user base of 3 million. However, this number increased to 6.5 million in the next month, Indodax revealed.
In August, another Indonesian-based crypto exchange, Tokocrypto, was positioned in second place with a volume of $18.7 billion among exchanges with the highest trading volume. Upbit ranked third after recording $8.14 billion within the same period.