Indonesia is targeting mid-2023 for its state-backed crypto exchange
Indonesia aims to launch its much-anticipated state-backed crypto exchange by mid-2023, according to the country’s Commodity Futures Trading Regulatory Agency (Bappebti), which currently oversees digital assets.
In a recent interview, Didid Noordiatmoko, head of Bappebti, said the new exchange will be established by mid-2023, Bloomberg reported. He added that the exchange will be run by a private company instead of the public one.
The plan to establish a state-backed crypto exchange comes as the nascent digital asset industry is riddled with fraud and scams. As reported, the crypto industry lost around $4 billion worth of digital assets due to hacks, scams, scams, and cover-ups in 2022, with five major exploits totaling $2,361,000,000 alone.
Furthermore, a number of high-profile crypto companies filed for bankruptcy last year, delivering billions in losses to private customers. FTX and Singapore-based Zipmex are among the more notable crypto exchanges that failed last year.
The plan for the new state-backed exchange is similar to the way stock markets operate, separating trading, clearing and custody under official supervision. Private sector crypto platforms will execute trades on the exchange once it is established.
“The difficult part is that we cannot find a benchmark for such a crypto exchange,” Noordiatmoko said. “This could be the first.” Other state-backed bodies would handle clearing and custody to protect customer assets and avoid a repeat of the alleged fraud like FTX, he added.
Last September, even before the chaotic collapse of FTX, the Indonesian government introduced revisions to tighten regulations over crypto exchanges in the country, saying that at least two-thirds of the exchange’s management “must be Indonesians residing in the country.”
The Indonesian authorities outlined several other revisions. For example, the government said local crypto exchanges must store client funds in third-party bank accounts. Also, the government banned exchanges from reinvesting crypto assets.
It is worth noting that interest in crypto has grown rapidly in Indonesia. According to Bappebti, crypto asset transactions reached 859.4 trillion rupiah (worth around $57.7 billion) in 2021, up 1,224% from 64.9 trillion in 2020.
The country was also ranked 20th out of 146 economies in the 2022 Global Crypto Adoption Index by Chainalysis, a blockchain analytics firm headquartered in New York City.
However, the country’s crypto sector has been hit hard following the recent unfortunate events. Data from CryptoCompare shows that monthly trading volumes have crashed 95% to $233 million last month from a peak of $4.7 billion in May 2021.
Meanwhile, experts believe that crypto adoption in Indonesia will get another boost with the upcoming crypto exchange. “The industry will grow, we will start to see more local projects,” Pang Xue Kai, CEO of major Indonesian crypto platform Tokocrypto, had previously said.
