The Development of Crypto Assets Has Negative Effects on the Indonesian Economy

The development of crypto assets in Indonesia can have a number of negative impacts that affect the country's economic system.

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Expert Staff of Organization, Bureaucracy and Information Technology Ministry of Finance Sudarto said the movement of crypto assets in Indonesia was not too large. Based on Ministry of Finance data, Indonesia's most popular crypto asset, Bitcoin, contributes to 0.38% of global Bitcoin value.

However, if the development of crypto assets in Indonesia is very rapid, this could have a number of implications for Indonesia. One of them is the value of crypto assets whose volatility is very high will affect investor confidence in a country's financial system, including responsible regulators.

"The value of assets such as money has back-up from the state and also its underlying assets . Cryptoasset value is determined by existing demand, so the value is very unstable,"`

The development of crypto assets can also affect financial institutions. Direct ownership of crypto assets and related derivative contracts in large quantities can expose financial institutions to credit, market and liquidity risks.

Such risks can also be systemic if the institution is connected to other financial sector entities, or if ownership is widespread in the financial system.

In addition, the size of the crypto asset market that increases significantly will disrupt financial system stability if there is a massive market loss.

Sudarto continued, the semi-anonymous nature of crypto assets can be misused by irresponsible elements. They can use these assets to fund harmful activities such as terrorism or money laundering.

So far, Sudarto said that crypto assets in Indonesia are not treated as financial instruments, but rather as commodities. This is due to the volatility of the value of this type of asset that can affect domestic economic conditions.

The regulation of crypto assets as a commodity is regulated in Regulation of the Minister of Trade No. 99 of 2018 concerning the General Policy for the Implementation of Crypto Asset Futures Trading and Bappebti Technical Regulation No. 5 of 2019 concerning Technical Provisions for the Implementation of Physical Crypto Asset Physical Markets on the Futures Exchange.

The regulation also stipulates a number of conditions that must be met by providers of crypto assets. The asset manager must be based in Indonesia, have a server backup and must have three certifications.

The certification is ISO 27001 namely the Information Security Management System, ISO 27071 (cloud system security), and ISO 27018 ( cloud privacy ).

In addition, crypto asset exchange providers must deposit IDR1 trillion($69.569,08 USD) as capital and maintain a capital balance of at least IDR800 billion($55.657,75 USD).