Vault Wallet Media Division

Created Dec 28th 2022

• Indonesia Reforms Cryptocurrency Regulation and Introduces CBDC

Cryptocurrencies are a relatively new class of assets, something that has not been as exposed to regulation as stocks, for example. Hence, the cryptocurrency market has been touted by many as "the wild west" for this reason alone.
More regulation would mean more protection for investors. As of now, there is no significant regulatory framework in place to ensure asset protection in the cryptocurrency market. This can give malicious actors the perfect leeway to carry out fraudulent activity, depriving investors of their hard-earned funds. However, things are looking to change quite a bit in that regard, as some countries have now announced reforming or introducing new regulations regarding cryptocurrencies. One such country that comes to mind is Indonesia, which plans to release its own national cryptocurrency exchange this year. According to a Bloomberg report, this is a component of the regulatory reform that, on December 15, was approved by the Indonesian House of Representatives.
This reform was an effort to shift the regulatory oversight of the cryptocurrency industry within the country. Prior to the reform, Indonesia had a commodities-focused agency known as Bappebti with jurisdictional authority over the cryptocurrency landscape within its borders.
With the legal backing provided by this new policy, the FSA (Financial Services Authority) of Indonesia can regulate the sector over the following two years. Consequently, through this reform, Indonesia plans to fully adopt cryptocurrency and offer services related to it for its citizens.
Indonesia has also started working on the introduction of its own CBDC, or Central Bank Digital Currency. Moreover, the Bank of Indonesia, via its Governor, released the digital rupiah's pilot design last December. In Indonesia, the apex financial body has also confirmed that the digital rupiah will soon become available, whereas in 2017, one can easily recall the Indonesian government placing a ban on payments involving cryptocurrencies but allowing legal premises for virtual asset trading.
In 2022, in Indonesia, there were around 16 million cryptocurrency investors, which was an increase from the 11.2 million the year before. That said, the trading volume last year had fallen to approximately $19.2 billion from $54.9 billion in 2021.

• Other Countries Making Preparations for Cryptocurrency Regulation

Countries like Israel, Nigeria, and Morocco have been working on introducing cryptocurrency regulations this year. Careful attention will be directed towards other countries' regulatory frameworks, which can include the United Kingdom and the United States, for example. Particularly in the United States, the crypto community has been keeping an eye on the Lummis-Gillibrand Cryptocurrency Bill this year.

• Final Thoughts

Cryptocurrency regulation brings with it a ton of merits for the sector. It can protect investors from malicious actors and help stabilize the sector as a whole. Despite the benefits, cryptocurrencies did not see anything in terms of regulation until recently, which is where countries like Indonesia come into the mix. So, from 2023 onward, we might see an increasing number of countries introduce some form of regulation for cryptocurrencies within their borders, which is something to look forward to.

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