The cryptocurrency market has been growing in popularity for the population of Indonesia. Several government officials in the financial department believe that the number of crypto investors has reached the same number of traditional stock market speculators.
Because of this, there was an imminent demand for regulating the cryptocurrency market in the country for the sake of investor safety. However, many believe that the methods that the local government used were a bit too harsh, while others believe that these methods help the population focus on just one aspect of the market which is a good way to streamline the trend.
Nevertheless, a new year means new amendments to the regulation that the local population needs to be prepared for. But first, we need to take a look at what kind of laws are already in place to understand the general crypto situation in the country.
Crypto Classification in Indonesia
Indonesia's Commodity Futures Trading Regulatory Authority, also known as Bappebti has classified cryptocurrencies as commodities in the grand scheme of the local financial regulator. However, the regulator has firmly requested local investors to refer to cryptos as crypto assets, rather than cryptocurrencies.
The reason behind this is that the regulator wants cryptos to be referred to as digital assets, therefore cemented as such in the eyes of local law rather than parts of a class that can be used as a medium of exchange.
This is extremely important for newcomers in the region, as many could potentially misinterpret cryptos as a means to buy goods in the country, which is currently not possible.
Indonesia Focuses on Crypto Futures
Bappebti was quite clear about its regulatory for crypto assets in 2019, and it's likely that they will continue to do so in 2020 as well.
The primary target for regulation was the Indonesian crypto futures market, which received much more attention than any other part of the industry. This was due to the extensive volatility that cryptocurrencies saw during 2019 Summertime.
The official regulation was confirmed in April, which was really poor timing from the regulator's part as cryptos immediately started jumping vigorously during May and June.
Basically, Bappebti was calculating on allowing the local investors to agree on the exchange rate of most cryptocurrency assets beforehand in order to have at least some guarantee of retaining value.
This was extremely important due to how volatile the markets were during 2018, which was the primary reference that Bappebti used when making the legislation in the first place. However, many believe that the timing for introducing the new regulation was terribly misplaced due to the exchange rate increases of 2020.
Bitcoin nearly doubled, while Indonesian traders were still using futures contracts for previous exchange rates, thus making them miss out on extremely profitable trades on regular margin trading platforms.
Ever since then, repealing this regulation has been discussed by the regulators.
People Want Change as Well
The Indonesian crypto investor community was also quite angry at the sudden increase of the minimal deposit for qualifying on crypto futures trading platforms. The industry quickly became a playground for massive investors, some reaching institutional levels. Considering the relatively smaller income population in the country, this particular part of the regulation was heavily misplaced.
Some say that Indonesian financial companies were offering more enticing opportunities for trading cryptocurrency CFDs on margin, but it was just too much of a risk. Furthermore, everybody preferred trading actual cryptocurrencies due to their anonymity and liquidity in the market.
This was pretty obvious too. It' much better to be able to store one's cryptocurrencies on a cold wallet and wait out a crypto winter than being completely out of the loop with crypto CFDs that have a specific deadline alongside serious transaction fees.
Possible Changes to the Regulation in 2020
Indonesia may have a nice foothold in the crypto industry, but they simply can't come close to how much the Chinese have an influence over the markets. With the new developments in Beijing, such as an additional focus on a government-issued Central Bank Digital Currency, the Indonesian regulators may start re-adjusting their approach to crypto regulations in the region.
There's also a possibility of introducing a locally produced digital currency which will have the potential of snuffing out any competition on local markets.
But all of it is speculation. The most likely outcome in 2020 is the lowering of the minimum requirements for entering crypto futures markets and a new focus on DLT (Distributed Ledger Technology).