Indonesia's Crypto Industry in 2021: A Kaleidoscope

In 2021, the number of global crypto holders has been estimated to have increased by 3.9% to more than 300 million crypto users worldwide, with more than 18,000 businesses already accepting cryptocurrencies as payment. India is currently in the lead with 100 million users, followed by the United States with 27 million users and Russia with 17 million users.

According to data from Triple A, Indonesia has the seventh-largest crypto user base, below Brazil and Pakistan. It is estimated that there are 7.2 million Indonesians who own cryptocurrencies, while according to the Indonesian Blockchain Association, as of July 2021, the number of crypto owners in Indonesia is 7.4 million people, an increase of 85% from 2020. This number is significantly more than the number of stock investors in Indonesia with only 2.7 million investors, based on data from the Indonesia Stock Exchange.

The total population of Indonesia in June was 272 million people, which means that only 2.7% of the Indonesian population owns crypto. This shows that there is still room for the crypto industry to grow, develop and reach more corners of Indonesian society.

The rapid growth of crypto investors in Indonesia is partly the result of Indonesian regulators that have welcomed crypto and blockchain developments with open arms. Throughout 2021, there have been many discussions with officials, new crypto regulations and developments in the sector. 

According to Dhila Rizqia, head of growth at local industry media firm Coinvestasi, the growing number of Indonesian crypto investors is also reflected in the rise of the crypto media. “In 2021, Coinvestasi has gained a lot of new audiences across our channels, including Instagram and YouTube which have grown over 1,787% and 1,388%, respectively.”

2021 has been an incredible ride for cryptocurrencies, in this article we’ll take a look at the hottest trends in the Indonesian crypto industry last year.

Whitelist of legal digital assets

Bitcoin (BTC) is legal in Indonesia as a commodity and can be traded on crypto exchanges. Early this year, the Commodity Futures Trading Regulatory Agency (BAPPEBTI) issued a whitelist of legal crypto assets for trading in Indonesia. 

This whitelist consists of 229 crypto assets, including Bitcoin, Ether (ETH), Polkadot (DOT), Cardano (ADA) and the popular memecoin Dogecoin (DOGE), that are allowed for trading on registered exchanges. 

These crypto assets are selected by two approaches: The first is a juridical approach which looks at the top 500 coins based on market cap in accordance with the provisions in regulation Number 5 of 2019. 

The second is through a process of hierarchy analysis, wherein BAPPEBTI assesses the security aspects, profiles of the founders and developer team, blockchain system governance, blockchain system scalability, roadmap and its verifiable progress. 

Crypto taxation

With the growth of crypto users and investors in Indonesia, the government, through BAPPEBTI and the Director General of Taxes, is also considering imposing taxes on crypto trading. For now, crypto taxation is still under discussion with several market players such as exchanges and industry associations. 

BAPPEBTI stated that the crypto tax in Indonesia could be around 0.05%, lower than the 0.1% tax imposed on stock trades.

Meanwhile, the government has reportedly begun to discuss an income tax for investors in crypto assets of 0.03%. 

Crypto is haram

The question of Bitcoin and crypto assets being halal (permissible) or haram (forbidden) under Islamic law has been a long and heated debate. As a country with a majority Muslim population, the topic is of particular importance for Indonesia.

In October, the East Java branch of one of Indonesia’s largest Islamic organizations ruled that while the government may approve of cryptocurrencies, they cannot be considered halal “based on several considerations, including the prevalence of fraud, it is considered unlawful.”

Less than one month later, the National Ulema Council (MUI) — Indonesia’s top Islamic scholarly body — found cryptocurrencies to be haram due to alleged elements of “uncertainty, wagering and harm.”

Furthermore, the trading of crypto as a digital commodity/asset did not meet other requirements of Islamic financial law because, according to the MIU, it lacked necessary elements such as having a physical form, having value, being proprietary and able to be handed over to the buyer. 

NFTs find support from celebrities to the governor 

The development of nonfungible tokens (NFTs) in Indonesia took off in 2021, especially after Ridwan Kamil, the Governor of West Java, jumped on this trend by inviting artists from West Java to create and promote their art as NFTs to be traded on NFT platforms such as OpenSea. 

NFT: A NEWMIND ECONOMYSeiring dgn logika2 baru ekonomi digital. Saya akan memulai transformasi kesejahteraan baru newmind economy utk para pelaku ekonomi kreatif.Yaitu bantu menjualkan karya2 seniman jalanan di bursa aset digital dunia yaitu NFT via pasar marketplace Opensea. pic.twitter.com/p91VlRBtZI

Indonesian singer Syahrini sold 17,800 NFTs for 20 Binance USD (BUSD) or around 286,300 rupiahs per NFT on the Binance NFT exchange, netting the singer a total income of around 5.1 billion rupiahs, or $356,000.

There is also chef Arnold Poernomo, a celebrity chef who also created his own NFT and promoted it on Twitter.

Exchange tokens

Exchange-issued tokens such as Binance Coin (BNB) and FTX Token (FTT) can be used by holders to get benefits provided by the exchange such as discounts on deposits, no withdrawal fees, opportunities to participate in promotional activities and so on. 

Indonesian local exchanges began to issue their own such tokens in 2021, with Tokocrypto releasing Toko Token (TKO) in collaboration with Binance on Binance Launchpad. From the beginning of this year’s listing, TKO has increased by over 1,000%.

Domestic crypto exchange PINTU launched its Pintu Token (PTU) in November, which is now available on various exchanges such as Bybit and FTX and is also supported by leading investors like Lightspeed, Coinbase and Pantera.

With two local exchanges launching their own native tokens in 2021, it will be interesting to see if other exchanges such as Indodax, Rekeningku or Triv follow suit in 2022.

Binance partners with largest Indonesian telco

To cap off the year Binance partnered with a subsidiary of Telkom Indonesia, MDI Ventures, to create a new exchange.

Within the collaboration, Binance will provide infrastructure and asset management technology to support the development of a crypto-asset exchange platform, which will be a joint venture between the two firms.

Donald Wihardja, the CEO of MDI, said that the partnership will help advance crypto and blockchain, which he believes are the financial systems of the figure.

With a friendly regulatory atmosphere, support and partnerships from global cryptocurrency firms, and growing interest in digital asset trading, it will be interesting to see how the industry continues to develop in 2022.