Indonesian Trade Minister Muhammad Luthfi has promised the public that the country will not ban cryptocurrency. Trading crypto will be permitted, but cryptocurrency purchases will be prohibited.
The Indonesian government has given its citizen’s permission to trade cryptocurrencies, rather than simply prohibiting all crypto-related transactions.
The government will concentrate its regulatory efforts on preventing crimes involving bitcoin. According to the Central Bank, cryptocurrencies are treated as trading assets and commodities that are inappropriate for payment.
Crypto assets, according to the government, are a volatile asset class with minimal underpinning. The Ministry of Trade Regulation No. 99 of 2018 made crypto asset trading lawful.
Crypto assets are typically exchanged on a spot market, which means they are transferred directly between buyer and seller. Spot traders profit from crypto assets only if the price of the assets rises.
The trader loses money if the asset’s price falls. According to central bank Governor Perry Warjiyo, cryptocurrencies are not recognized by the Indonesian constitution or central banking laws.
The Deputy Minister of Trade and Industry announced that Indonesia’s central bank is in the process of building its own central bank digital currency with its own crypto exchange by 2021.
Indonesian and crypto trade
Over the last 18 months, the Indonesian crypto market has seen incredible transaction volumes. Transaction volumes on 13 local exchanges climbed by 40% between January and May 2021, bringing the total to $4.5 billion in 2020.
Local exchanges, such as Pintu and Luno Indonesia, are required to maintain a server in the country with a five-year trading history and employ at least one security expert.
Luno Indonesia currently has over 700,000 users and appears to be confident that this figure will continue to grow tremendously.
Indodax, which claims to be Indonesia’s largest exchange, claimed three million customers in April 2021, and by May 2021, the number of people trading had risen to 6.5 million.
This is higher than the 5.3 million retail investors registered with the Indonesian Stock Exchange, which was risen from four million at the end of 2021. Tokocrypto, Upbit, and Koinku are three other significant Indonesian exchanges.