What is happening with Crypto in Indonesia?

JAKARTA, Indonesia, 18 August 2022 /PRNewswire/ — The global crypto market is currently experiencing a complete downturn. If people consider increase in recent years, the total market value of crypto assets has reached more than 3 trillion US dollarsbut currently the overall capitalization value has been observed to fall below 1 trillion US dollars or around 901 million US dollars Wednesday (29/6). This figure is the lowest performance for the first time since February 2021. This phenomenon of falling market prices for cryptoassets is known as a bear market, a cycle currently faced by crypto markets globally. Unlike other asset markets, the cycle of the crypto asset market moves much faster.

In the crypto industry, bear markets are common and only temporary. From this bear market phenomenon, according to Asih Karnengsih, chairman of Indonesian Blockchain Association (ABI) that “bear markets have become common in the crypto space, last happened in 2018 and we all know what happened after that, this momentum is a natural process of eliminating players who enter this industry only because of valuation or numbers alone, while the real players are increasingly focusing on building and developing.” In addition, there are several factors that have influenced the state of the crypto asset market in recent months, namely:

• Bitcoin (BTC) showed its worst price movement in more than a decade in the second quarter of 2022, with the price of BTC touching $17,600 on June 18.

• The fall in the value of Terra and its two assets (LUNA and UST) which were previously crypto-assets with a market capitalization of 40 billion US dollars in April, was in the top 10 according to Coin Market Cap. In July, the market value was just 800 million US dollars. The LUNA coin is down 99% and the stablecoin UST lost its peg value against the US dollar (depeg).

• Solana’s crypto-asset ecosystem, which was in trouble after the discovery of thousands of Solana-based wallets, has been hacked. According to Bloomberg, Elliptic, a blockchain forensics company, said more than 7,900 of Solana’s wallets had been stolen and the loss was estimated at more than 5.2 million US dollars. Meanwhile, PeckShield as one of the security companies said that due to the Solana-based wallet hacking, the victim had suffered a loss of approx. 8 million US dollars.

• Several crypto asset service providers that are in financial trouble due to the current bear market conditions have gone bankrupt, which occurred in:

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1. Three Arrows Capital (3AC) was unable to cover its liquidity June 29 due to default in payment of crypto loans of more than 650 million dollars.

2. Celsius network announced termination of all moves due to bankruptcy in illiquid assets. However, Celsius is currently proposing another solution to restructure the company by mining BTC on Monday (7/18).

3. Vault has also suspended withdrawals for its more than 800,000 customers.

4. Babel Finance has temporarily suspended the withdrawal and redemption of crypto-assets because, according to the management, Babel Finance is facing high liquidity pressure.

The existence of financial problems that led to the issue of bankruptcy in the midst of the bear market conditions caused several companies that deposited their digital assets in these companies to experience a direct impact. One of them is the potential Crypto Asset Physical Trader/Exchange registered with Bappebti/CoFTRA, Zipmex. In its official release, Zipmex explained that it had deposited assets with Babel Finance and Celsius since the start of ZipUp+’s operations and had announced a temporary halt in the process of withdrawing funds and crypto-assets. Zipmex has made various efforts to overcome these issues, including fundraising, legal action and restructuring, and now Zipmex has reactivated the withdrawal of funds and digital assets on the Trade Wallet. In addition, since 2 August 2022, Zipmex has also released Solana, Ripple, Cardano and Ethereum cryptoassets from Z Wallet to users’ Trade Wallet periodically. Zipmex through its official communication channel also announced that management has signed three Memorandums of Understanding (MoU) which are part of the restructuring plan by introducing new financing to the company through an investor group led by Zipmex’s shareholders to keep the company’s operations going and maintain their integrity .

So, what will happen to the future of the crypto market industry? Asih said: “In fact, even from a valuation point of view, 2 years ago the value of bitcoin was around $8000At the moment, although it is a bear market, the value of bitcoin is reaching $20,000 so it can be seen from a long-term perspective, crypto is here to stay.” Oscar Darmawanas the CEO of Indodax also shared his opinion that “at a time of bearish market like this, it is the right moment for investors to accumulate crypto portfolios”.

With the challenges facing the crypto industry, the regulation from Bappebti/CoFTRA has been very accommodating in terms of consumer safety with the necessity of a Crypto Futures Exchange. Malikulkusno Utomo, who is often called Dimas, General Counsel of PINTU, participated in giving his views on the formation of a crypto exchange, according to Dimas “the establishment of a crypto futures exchange can be immediately realized to encourage the progress of the crypto industry in Indonesia, increase public confidence, provide information distribution and protect investors, PINTU believes “it is more appropriate if the futures exchange is an exchange that has gone through a series of strict processes and complies with the requirements according to the current regulations”. Oscar also added that he hopes that the current government “can soon inaugurate the Digital Future Exchange (DFX) crypto futures exchange that will later help monitor crypto transactions to be more secure and protect crypto asset traders. I am optimistic that the establishment of this futures exchange can promote the crypto ecosystem Indonesia to become even better”.

Deputy Trade Minister Jerry Sambuaga said the establishment of the Indonesian crypto exchange is almost complete, “the bottom line is that it is close, hopefully as soon as this year,” Jerry said on Thursday (28/7). Regarding the readiness of the DFX Consortium, Alex Kim as CEO of Upbit APAC which is part of the consortium said “risk reduction to institutions regulated and supervised by Bappebti/CoFTRA, when market conditions are bad, business actors and consumers’ funds can be protected by this ecosystem. DFX as a potential crypto exchange is ready to operate and contribute to the Indonesian ecosystem for the crypto-assets industry, in accordance with the mandate of the authorities, especially Bappebti/CoFTRA. This is why we really welcome and look forward to the completion of DFX”.

SOURCE Asosiasi Blockchain Indonesia