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 that the new exchange will be established by mid-2023, Bloomberg reported. He added that the exchange will be run by a private-sector company rather than the government.
The plan to establish a state-backed crypto exchange comes as the nascent digital asset industry remains rife with scams and fraud. As reported, the crypto industry lost approximately $4 billion worth of digital assets to hacks, fraud, scams, and rug pulls 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 retail customers. FTX and Singapore-based Zipmex are among the more notable crypto exchanges that failed last year.
The blueprint of the new state-backed exchange resembles the way stock markets, separating trading, clearing, and custody under official oversight. Private-sector crypto platforms will execute trades on the exchange once it is established.
“The hard part is we can’t find a benchmark for such a crypto bourse,” Noordiatmoko said. “This could be the first.” Other state-backed bodies would handle clearing and custody to protect customer assets and avoid any replay of the alleged fraud like FTX, he added.
In September last year, 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 exchanges’ management “must be Indonesians residing in the country.”
The Indonesian authorities outlined several other revisions. For example, the government said local crypto exchanges need to store client funds in third-party bank accounts. Moreover, the government prohibited exchanges from reinvesting crypto assets.
It is worth noting that interest in crypto has been rising rapidly in Indonesia. According to Bappebti, crypto asset transactions reached 859.4 trillion rupiahs (worth around $57.7 billion) in 2021, up 1,224% from 64.9 trillion in 2020.
The country also ranked 20th out of 146 economies in the 2022 global crypto adoption index from Chainalysis, a blockchain analysis 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 receive another boost with the upcoming crypto stock exchange. “The industry will grow, we’ll start seeing more local projects,” Pang Xue Kai, CEO of major Indonesian crypto platform Tokocrypto, had previously said.