GCR Trend Update 2020: Crypto Trends in Indonesia
Given the ongoing Coronavirus taking place in China and in the surrounding region, having a large impact on the crypto activities such as conferences and communities, we continue to believe Southeast Asia (SEA) may be potentially spared as one of the breakout regions in the eastern hemisphere in 2020. As we emphasized earlier this year, we advise our readers to pay attention more to SEA this year. SEA will see a concentrated and robust number of crypto activities in many of its regional countries, whether that’s focused on crypto, blockchain or digital currencies.
For our next few premium posts, we’ll be diving into the recent trends and ongoing opportunities in blockchain and digital currencies in SEA.
Crypto Trends in Indonesia
In 2017, Bank Indonesia, the country’s central bank, issued regulations to ban the use of cryptocurrencies including Bitcoin as legal tenders. However, in February 2019, the Indonesian government launched a new regulation that legalized cryptocurrency as tradable assets. Following the footsteps of many other neighboring countries, the Indonesian regulator mindset has evolved from regulator to that of a facilitator and incubator.
Crypto and Blockchain Trends by Category in the Country:
- Central bank digital currency- Bank Indonesia (BI) announced plans to launch its own blockchain-based digital rupiah currency. Five other banks in the country are also investigating ways to integrate the technology as well. These include Bank Negara Indonesia, Bank Rakyat Indonesia, Bank Mandiri, Bank Danamon, and Bank Permata.
- Banking the unbanked through blockchain- For example, UAE-based Halal Chain aims to tap into the massive unbanked population in Indonesia, the most populous Muslim-majority country, with offerings of blockchain-based Islamic financial services
- Decentralized marketplace on blockchain- With a population of more than 270 million, of which 65 million are expected to be e-commerce users by 2020. For example, local blockchain startup Havy Store have aimed to establish a decentralized marketplace for online business to operate in a more productive, straightforward, and dependable manner.
- Smart city
- Blockchain-powered capital- In August this year, the Indonesian government announced plans to shift its capital city from the heavily congested Jakarta to the refreshingly serene Island of Borneo, developing the new capital under the smart city concept. As a technology that features automation and interoperability, blockchain would become an essential part of the fabric of the new capital city, an epicenter from which the country will transform into a blockchain-driven digital archipelago.
- Healthcare blockchain- for example, the Batam administration (BP Batam) revealed that it has entered into a US$140 million partnership with dClinic — a developer of the Public Healthcare Blockchain — with the aim of providing better healthcare services to citizens in Batam.
- Shipping services on blockchain – for example, PLMP Fintech, a blockchain firm based in Singapore, is participating in a major logistics project in collaboration with Indonesia’s Ministry of Trade. It aims to improve the country’s shipping industry starting with Riau province, which is located along one of the busiest shipping lanes in the world.
- Data collection on blockchain– for example, an Indonesian musician who now runs Massive Music Entertainment — unveiled a blockchain platform to collect data in the music industry, from copyrights and labels to commercialization management.
- Crypto Trading and Exchanges
- Exchanges- many exchanges from Korea and China have established an arm in Indonesia.
- Foreign listing in Indonesia- projects look to Indonesia exchange to list their tokens. For example, Upbit Indonesia listed Klay, the cryptocurrency of South Korean instant messaging giant Kakao.
- Education in blockchain- for example, Indonesia’s Attorney General organized a course to educate lawyers on cryptocurrency as part of efforts to combat the use of digital assets for illegal activity.
Indonesia’s internet economy is the largest and fastest growing in the region, reaching US$27 billion in 2018 and is poised to grow to US$100 billion by 2025. In fact, at this point, half of Southeast Asia’s unicorns are from Indonesia. Southeast Asia is a region that has the most unicorns (startups with a valuation of over US$1 billion) after China and India.
On the fintech opportunity front, a majority (66%) of the country’s 260 million population are ‘unbanked’, but 66% of the population was raised on internet access. However, fewer than 40% of Indonesian smartphone users have used financial services apps before. Given the fact that Indonesia is an archipelago consisting of more than 17,000 islands with an unbanked population of over 180 million Indonesians. We believe the rise of local fintech opportunity offers a potential significant onboarding opportunity for the crypto industry, particularly for onboarding issuers into blockchain technology, fintech tools around owning and managing one’s fiat and crypto asset.
The biggest challenge in developing this platform is finding blockchain developers in Indonesia as well as Southeast Asia.