Indonesia is targeting mid-2023 for its state-backed crypto exchange

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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 trading. digital assets.

In a recent interview, Didid Noordiatmoko, Director 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 plagued by scams and fraud. As noted, the crypto industry lost an estimated $4 billion in digital assets to hacks, frauds, scams and raffles in 2022, with five major exploits alone totaling 2,361,000. $000.

Additionally, a number of top crypto companies filed for bankruptcy last year, resulting in billions in losses for retail customers. FTX and Singapore-based Zipmex are among the more notable crypto exchanges that failed in the past year.

The plan for the new state-backed exchange resembles the way stock exchanges separate trading, clearing and custody under official supervision. Private sector crypto platforms will execute trades on the exchange once it is established.

“The most difficult thing is that we cannot find a benchmark for such a crypto exchange,” Noordiatmoko said. “It could be the first.” Other state-backed bodies would handle clearing and custody to protect client assets and avoid any repeat 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 on crypto exchanges in the country, saying that at least two-thirds of exchange management ” must be Indonesians residing in the country”.

The Indonesian authorities submitted several other revisions. For example, the government said local crypto exchanges must store customer funds in third-party bank accounts. Additionally, the government has banned exchanges from reinvesting crypto assets.

It should be noted that interest in crypto has grown rapidly in Indonesia. According to Bappebti, crypto asset transactions reached 859.4 trillion rupees (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 by Chainalysis, a blockchain analytics firm headquartered in New York.

However, the country’s crypto sector has been hit hard following the recent unfortunate events. Data from CryptoCompare shows that monthly transaction volumes fell 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 leading Indonesian crypto platform Tokocrypto, previously said.

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