Status quo of blockchain development in Indonesia

Blockchain has gained a lot of attention in recent years. Many countries have launched relevant policies to actively promote related projects, hoping to seize the opportunity in the blockchain field. As a developing country with a large population, Indonesia’s future potential cannot be underestimated. Blockchain and crypto assets are also booming in Indonesia. Indonesia has also recently started evaluating its own CBDC project. In addition, blockchain has some different applications in Indonesia, including philanthropy and agriculture.

Blockchain Regulation in Indonesia

On January 25, 2022, the Indonesian Financial Services Authority (OJK) issued an announcement stating that with the popularity of the blockchain, the private sector has swarmed in with little understanding of it, causing regulatory concerns. As such, financial firms are required not to use, market or facilitate transactions in crypto assets. The value of encrypted assets fluctuates frequently, and investors who purchase digital assets should fully understand the risks.

Previously, Indonesia’s trade ministry had said that domestic crypto-asset trading was surging. Indonesia’s total transaction value in 2021 reached IDR 859 trillion (USD 59.83 billion), much higher than IDR 60 trillion (USD 4.176 billion) in 2020.

To regulate the crypto asset market, Indonesia’s Financial Services Authority is currently pushing for the establishment of a separate digital asset exchange, called the Digital Futures Exchange, which officials have said will be launched in the first quarter of 2022, but still Not launched.

In fact, Indonesia allows the sale of crypto assets on commodity exchanges, with transactions regulated by the Ministry of Trade and Commodity Futures Trading Regulator, not OJK. But Crypto cannot legally be used for payments in the country.

Indonesia has introduced tailored regulations to provide clearer information and support citizens wishing to trade Crypto. The Futures Exchange Supervisory Board, also known as Bappebti, oversees Crypto-related trading in Indonesia. Bappebti has introduced a series of regulatory measures since 2019, including licensing of crypto futures exchanges.

Indonesia is also home to several crypto businesses and exchanges, including Indodax and Binance-backed Tokocrypto. A 2020 report by the Indonesian Blockchain Association shows that there are more than 1.5 million traders in Indonesia, an increase of 2,263% since 2015. Indonesian interest in Crypto has grown considerably in recent years.

Indonesia evaluates its own CBDC

On May 30, 2021, Bank Indonesia Governor Perry Warjiyo announced via Instagram (a website that shares photos abroad, similar to Weibo) that Bank Indonesia is conducting research and evaluating the possibility of deploying a digital Indonesian rupiah (CBDC).

In this assessment, Bank Indonesia will mainly consider three factors:

1. Digital currency will become a legal payment tool.

2. Reliability based on technology, especially blockchain.

3. The digital rupiah will enrich the central bank’s policy toolbox and help the central bank manage the money supply in Indonesia.

According to Fitria Irmi Triswati, Director of the Payment System Policy Department of the Bank of Indonesia, many studies related to the development of CBDC or digital rupiah have been carried out. According to him, the development of digital currency has many considerations, such as structure, technology, mechanism, and the impact on the stability of the financial system.

Boom in Indonesia Crypto Exchange

In August 2021, Indonesian Crypto exchange Pintu raised $35 million in a Series A funding round. Investors see the exchange as having the potential to become one of the wider Crypto exchanges in Indonesia and even Southeast Asia. Pintu is the first mobile native Crypto wallet and trading platform in Indonesia.

Pintu’s Series A round was led by Lightspeed Venture Partners, with additional investors including Alameda Ventures,, Pantera Capital, Coinbase Ventures, Castle Island Ventures and Intudo Ventures. Lightspeed Venture Partners is a technology-focused investment firm. Current investments by Lightspeed Venture Partners are broadly in blockchain, fintech and data analytics.

With this financing, Pintu plans to recruit more talent, launch new products and drive future adoption of Crypto in Indonesia, Pintu said. Pintu’s co-founder and CEO Jeth Soetoyo said that Pintu will help Indonesians access financial services, especially Crypto, at a lower cost. As the fourth most populous country in the world, only 1-2% of Indonesians have exposure to Crypto, so there is a huge opportunity for retail investors to gain diversified and dynamic investment opportunities through Pintu’s unique crypto asset trading products.

Pintu is certified by Bappebti as a licensed Crypto broker/trading platform. This enables Pintu to serve retail investors. Currently, Pintu offers 16 types of Crypto, including NFTs.

While there are more and more companies buying and selling digital assets, the crypto industry in Indonesia as a whole is still in its infancy. Bappebti gave Crypto the green light in February 2019, classifying the asset class as a speculative commodity that requires a permit to be regulated.

Indodax is the largest Crypto exchange in Indonesia, currently with 1.7 million registered users and processing more than 100 billion rupiah ($7 million) in transactions per day. Indodax is Indonesia’s leading digital asset trading platform and the foundation of Indonesia’s entire financial ecosystem implementing open blockchain technology. It has been serving Indonesia and Southeast Asia since 2014. Since then, Indonesians have gradually become fascinated with Crypto and actively participate in Crypto-related transactions.

Indodax obtained the fiat currency spot compliance license from Bappebti, the Indonesian government’s Ministry of Trade in February 2020, and is currently actively preparing for derivatives trading license applications. The goal is to become a comprehensive financial investment platform for digital currency and commodity trading, and is expected to become a future Indonesia The only national team operating in compliance. In addition, Indodax is currently conducting equity financing and is expected to complete its IPO in the second half of 2022, and may become the first digital currency exchange to land in the traditional financial market.

According to the Indonesian Ministry of Trade, as of August 2021, Indonesia has more than 6.6 million Crypto investors. Indonesian lawmakers are considering a new tax framework for Crypto traders. In May 2021, a spokesman for Indonesia’s General Tax Administration said that Crypto profits could soon be classified as capital gains.

Local Indonesian business partners with Binance

On December 15, 2021, Binance, the world’s largest Crypto exchange, and PT Telkom Indonesia, an Indonesian telecommunications company, have reached a partnership to develop a new Crypto exchange in Indonesia.

In addition to this, the partnership will also seek to expand blockchain adoption in Indonesia, which currently has a population of around 240 million people. To assist in the development of the new trading platform, Binance will provide asset management infrastructure and technology.

This new partnership will allow Binance to expand its operations in Indonesia, where Binance has already invested in crypto trading platform Tokocrypto.

In response, Binance CEO and founder Changpeng Zhao said that Binance’s goal is to develop the blockchain and Crypto ecosystem on a global scale, and this move in Indonesia is an important step in that direction. With the rapid adoption of the technology and strong economic potential, Indonesia could become one of the leading centers of the blockchain and crypto ecosystem in Southeast Asia.

Binance, which faced strict regulatory restrictions (globally) in Q2 and Q3 2021, is now looking to expand in Asia. Partnering with local businesses to develop related businesses will improve Binance’s overall financial profile.

The case of the combination of Indonesian finance and blockchain

Currently in Indonesia, there are companies developing blockchain-based projects for areas such as philanthropy and agriculture.

BeKind is a startup using blockchain for charity management. Launched in June 2021, BeKind aims to address two major challenges in the global giving system: accountability and business sustainability, according to CEO Fajar Jasmin. Donors who donate through charities have no idea how much of their money ends up in the hands of beneficiaries. Since charities are run by non-profit organisations, many of them operate without sufficient cash reserves and are therefore unsustainable.

BeKind created a token K1ND based on Binance Smart Chain. After the official launch of the token in December 2021, donors will be able to earn K1ND on the Tokocrypto exchange and through other channels such as peer-to-peer transfers. Donors can then deposit their K1ND into the online wallets of charities and nonprofits listed on the BeKind platform. They can also choose to stake their tokens on the BeKind Hub platform, just like accruing interest in a savings account.

Fajar Jasmin said the system allows for greater transparency as all transactions are recorded on the blockchain and can be found online by all users. The system also enables donors, charities and nonprofits to earn interest by staking their tokens. Tokens are deposited into a staking account at a given annual interest rate or annual rate of return and can be freely withdrawn at any time. BeKind also plans to implement a tracking system on the blockchain, providing information on the development of projects funded by K1ND. In the future BeKind will provide blockchain-related documents and impact donation reports to ensure transparency.

Hara is a blockchain-based food and agricultural data exchange platform. Hara was launched in 2015 to implement the concept of precision agriculture using technologies such as remote sensing. The goal is to manage farms more accurately and increase yields. Hara pivoted to data collection in 2017.

Hara’s founders, Regi Wahyu and Imron Zuhri, believe that reliable crop data can help players in the agricultural sector. The company collects, verifies and records farm data on the blockchain, including production data, farming processes, soil and crop conditions, pest infestations and land ownership.

Hara’s head of business development, Firnando Sirait, said Hara works with agri-entrepreneurs who have Android phones and, with Hara’s app, can act as data collectors in the community. Hara incentivizes farmers to provide data by offering loyalty points that can be redeemed on Hara’s platform for discount coupons for produce or mobile credit. Hara uses this data to run multiple projects, such as mass planting campaigns, where farmers can use their backyards or non-productive land to grow crops using plastic bags. Hara also provides farmers with yield forecasts based on the data collected. Based on the data, farmers can get all kinds of support, such as faster business loans or access to more potential buyers, Hara said. Hara also sells the collected data to private companies, government agencies and financial institutions through a utility token called HART.

Hara said buyers use the data to improve their services to the agricultural sector. For example, financial institutions can conduct credit scoring and risk analysis to issue microcredit to farmers. At the same time, local governments can make decisions to solve agricultural problems based on detailed data collected by farmers. The company is currently developing more use cases for its blockchain technology.

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