A government official has said that the authorities in Indonesia do not intend to follow the example of China in imposing a total ban on cryptocurrencies, noting that the country will be limited to ensuring that they are not used for illegal activities. The statement comes after local crypto exchanges reported a significant increase in trading volume this year.
Indonesia Tightens Regulations Without Banning Crypto Transactions
In comments to local media, Indonesian Trade Minister Muhammed Lutfi stressed that the Indonesian government will not follow in the footsteps of China, which has confirmed a ban on all cryptocurrency transactions. The official added, however, that the government is looking into how to make them less likely to be used for illegal financial activities. Quoting Berita Sato and The Jakarta Globe, Lutfi said:
We don’t ban it, but we will tighten regulations.
Cryptocurrencies such as Bitcoin, Ethereum and Dogecoin are currently considered assets and commodities in Indonesia. Their legal treatment allows residents of the Southeast Asian country to trade cryptocurrencies, but it is not allowed to use them as a means of payment.
China’s central bank said this week that transactions involving cryptocurrency are illegal, echoing previously imposed restrictions. All related financial activities, including cryptocurrency trading, token sales and transactions with virtual currency derivatives, are also prohibited. The announcement, which hurt cryptocurrency markets, comes after a months-long crackdown on bitcoin mining and trading across the country.
Indonesian cryptocurrency trading booms in the first half of this year
China’s tough stance on decentralized money has affected cryptocurrency prices in Indonesia as well. Bitcoin (BTC) fell 7.4% on the country’s largest exchange, Indodax, to 595 million Indonesian rupiah (less than $41,000) right after Friday’s PBOC notice. The leading cryptocurrency by market capitalization has since recovered to 609 million rupees per coin ($42,650 at the time of writing).
According to reports, the Indonesian cryptocurrency trading has boomed in the past year and a half. Transactions on 13 local exchanges licensed by the Futures Exchange Supervisory Board increased by 40% in the first five months of 2021. During 2020, the volume of transactions reached 65 trillion rupees ($4.5 billion), according to the cited data.
Meanwhile, the number of individuals engaged in trading exceeded 6.5 million in May from 4 million at the end of last year. Luno Indonesia, another major exchange operating in the country, has expressed confidence that it can double or triple its customer base from the current 700,000 users. “The growth is amazing today… Cryptocurrency is booming,” said platform director Jay Jayawijayaningtias on Wednesday.
Do you think the popularity of cryptocurrencies will continue to grow in Indonesia? Tell us in the comments section below.
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