Indonesia Set to Launch Cryptocurrency Exchange by June 2023 Ahead of Regulatory Shift

The Indonesian government is set to launch a cryptocurrency exchange in June to shift regulatory powers over digital assets to the Financial Services Authority (FSA). 

Shifting Digital Assets Regulatory Oversight to Indonesia Government 

The Indonesian Ministry of Finance considers cryptocurrency and other digital assets a major financial sector, which is why it plans to launch a national cryptocurrency exchange in 2023 as part of its custodial and regulatory reform policy. 

Currently, crypto assets in Indonesia are traded alongside various commodity contracts licensed by the Commodity Futures Trading Regulatory Agency (CFTRA), also known as Bappebti. The Financial Services Authority (FSA) will take over regulatory power of all digital assets over the next two years as part of a broader financial sector reform. 

This new reform will equip the FSA with the legal backing to regulate the crypto industry and create a cryptocurrency market and other related digital services for citizens of the country. 

Zulkifli Hassan, head of the Indonesia Ministry of Trade, stated on February 2, 2023, at the opening of Crypto Literacy Month in Jakarta, that the government is reviewing financial companies that meet their standards to become part of the exchange. 

New investors are still entering the crypto market after its bearish run in 2022. According to a Bloomberg report, there were 16 million crypto traders and investors in Indonesia in 2022, with over 390 trillion (equivalent to $19.2 billion) Rupiah – Indonesia’s local fiat currency – traded during that period, a fraction of 859 trillion Rupiah recorded in the previous year. 

There are currently 383 crypto assets and ten local coins that can be traded in Indonesia, with the Financial Services Authority reviewing 151 assets and ten coins. Although the reform’s impact is unknown, it is expected to affect crypto investment significantly.

Some cryptocurrency platforms registered with the Indonesian government include – Indodax, Luno, Pintu, TokoCrypto, and OKCoin. According to Zulkifli, the Ministry of Trade’s upcoming crypto exchange could encompass all of them. In simpler terms, while these exchanges provide crypto markets and trades to Indonesians, the Ministry’s exchange would act as a custodial and a clearing house in the crypto market. 

The national cryptocurrency exchange will further manage crypto movements between several parties and mediate between Indonesian crypto buyers and sellers to ensure transactions go smoothly and seamlessly. 

Furthermore, the exchange is set to provide greater clarity and regulation in the crypto industry. Its major impact on the use of and massive adoption of cryptocurrencies is yet to be set on balance. To further cement its stance in the digital world, Indonesia’s Central Bank has set plans to roll out the “Digital Rupiah” that Indonesians can use to make purchases in the next metaverse world.  

Regarding the urge to release the long-anticipated crypto exchange, Zulkifli urges the citizens of Indonesia to be patient, stating that the government does not want to rush into the crypto space and make a massive mistake that will take a colossal toll on the people due to their beginner’s knowledge in crypto trading. 

Countries Preparing For Cryptocurrency Regulation in 2023

Many enthusiasts and analysts see the rise of crypto and digital assets as part of a broader trend toward a more diverse financial market and sovereignty, which promotes new ways to pay for goods and services.

However, this is not the case in several countries. Countries such as the United Kingdom (UK), Israel, Morocco, and Nigeria are drafting regulatory frameworks in 2023. Although the United States of America (USA) currently sits on the fence regarding its intention to regulate or allow full operational activities of the crypto industry, attention remains drawn to whatever rectification comes to play. 

As the world evolves rapidly, applying regulatory frameworks to crypto assets or developing new ones remains subject to functionality. As more information is uncovered, we can only measure its gravity.