Cryptocurrencies trend in Indonesia
In 2021, cryptocurrency transactions in Indonesia reached almost 860 trillion Indonesian rupiah, compared to 65 trillion Indonesian rupiah in the previous year. The significant increase was partly influenced by the decision of Indonesian regulators to permit the trading of cryptocurrencies as commodities in 2019. Currently, Bitcoin is the most popular cryptocurrency to own in the country and remains the digital currency with the highest transaction values among Indonesian investors. Apart from Bitcoin and other well-known cryptocurrencies such as Ethereum and Ripple, Dogecoin is another popular cryptocurrency among Indonesian investors. Due to widespread attention and hype generated from social media, Dogecoin was Indonesia’s leading cryptocurrency based on its transaction values in the first half of 2021.The Cryptocurrency Adoption Index placed Indonesia 20th out of 146 nations in 2022. Indonesia outperformed most other countries in terms of retail service value for both centralized and decentralized finance (DeFi) value. This confirms that Indonesians are embracing digital payment trends. Moreover, the popularity of cryptocurrencies among Indonesian investors as a new source of income was also impacted by the positive trends in the global cryptocurrency market. Another major contributing factor to the cryptocurrency success in the nation is their mobile-first strategy with easily accessible apps. With Indonesia’s internet and smartphone penetration rate standing at 69.8 percent and 67 percent, respectively, in 2020, it is also no wonder that there is more traction from the country’s mobile-heavy user base.
Challenges facing the Indonesian cryptocurrency market
As an emerging market, many investors are beginners in financial investments and are more vulnerable to questionable exchanges and assets. It was reported that Indonesia contributed 11 percent of total victims to cryptocurrency scams in 2019, the second highest in the world. Hence, Indonesia’s central bank, Bank Indonesia, has been holding talks on cybersecurity-related matters concerning digital currency to educate Indonesian investors.The Indonesian government, through Indonesia's Commodity Futures Trading Regulatory Agency (BAPPEBTI), which regulates crypto trading in the country, and the Director General of Taxes, is currently considering imposing taxes on cryptocurrency trading in the future. In the next few years, Indonesia is also planning to introduce its central bank digital currency (CBDC), which utilizes blockchain technology. These plans, however, can be a countermove against cryptocurrency, which has been growing rapidly in the country. This might discourage investors from choosing cryptocurrency as an investment avenue and delay the mass adoption of cryptocurrency assets in Indonesia. Nevertheless, a study found more than 60 percent of Indonesian respondents agree with the notion that cryptocurrency is the future of money and that its value will get higher in the future. With the growing trend in the number of transactions, traders, and exchanges in the past years, Indonesia’s cryptocurrency market will possibly expand in 2022 and beyond.
