Indonesia is not a country that pops in our minds when Bitcoin, cryptocurrency or blockchain are mentioned. However, it’s important to consider the current crypto reality of this country because it teaches us a very important lesson on what may happen when a country’s government is extra careful about how they handle regulating the crypto industry on their territory.
In order to set the mood, I’ll say that Indonesian regulation has cost the companies, as well as traders much more than unhinged access to the market, would have. Most of it has to do with extensive focus on one aspect of the market and that is the Bitcoin Future segment. Margin trading in Indonesia is either discouraged or outlawed completely.
The Bitcoin futures market of Indonesia
As of right now, Bitcoin Futures are one of the primary focuses of the Indonesian regulator. This market, in particular, is governed by Indonesia’s Commodity Futures Trading Regulatory Authority, also known as Bappebti.
The regulator did quite a lot of work in order to popularize crypto futures much more than any other form of crypto trading for one reason and one reason only. It’s much safer.
Yes, Indonesian traders were able to strike contracts with their service providers promising them that the exchange rate would remain the same for them should the markets go down significantly in exchange for additional fees.
This seemed like the safest approach to crypto trading at the time, simply because the markets were extremely volatile. However, Bappebti chose the worst possible time to implement these new rules.
You see, when a Bitcoin future contract is struck, the exchange rate remains the same no matter what. The service provider risks losing some money in exchange for additional maintenance fees and a slight chance of the market growing instead of falling. And in the case of 2017 (when the regulation was approved) that turned to be the case. Many Indonesian traders missed out on the Bitcoin hype train due to their futures contracts, which has created lasting resentment toward Bappebti.
There are also rumors floating around the Indonesian crypto community that Bappebti wanted to address and those were crypto trading robots. You see, Bitcoin futures were already quite popular in the country, meaning that there was very little that these trading robots could to sign new traders up. Because of this, they started to associate themselves with Bitcoin futures even though they were not supporting them.
One example of this is Bitcoin Future, which is a trading robot still being debated about its legitimacy. The company needed access to the South-East Asian region and the name was absolutely perfect for Indonesia.
Once word got out about companies using these tactics, it’s believed that Bappebti made the final decision to implement the new regulatory requirements. However, this is simply a rumor and nothing else.
Negative attitude towards regulations
One thing that most Indonesian traders complain about is the entry-level for this new crypto regulation. In the past, almost everybody could open an account and start trading Bitcoin Futures, but now that scams and numerous issues have been identified in the market, Bappebti wanted to make sure that those who were trading these assets, had the funds to lose, to begin with.
This meant increasing the minimum deposit on most platforms, thus cutting out a large chunk of the market out of the equation completely.
Naturally, this left both the service providers and the traders extremely unhappy. One lost supply of thousands of customers, while the other lost access to arguably the only source of income.
Needless to say, the Indonesian regulation had good intentions but failed to calculate the time at which it would begin. It serves as a perfect example for other countries to time their legislations according to market predictions, or else have their population face serious economic loss.