Asosiasi Blockchain Indonesia: What's Up with Crypto in Indonesia?

Published : Aug 18, 2022 - 15:30 Updated : Aug 18, 2022 - 15:30

JAKARTA, Indonesia, Aug. 18, 2022 /PRNewswire/ -- The global crypto market is currently experiencing a complete decline. If people consider the increase in the last few years, the total market capitalization of crypto assets has reached more than 3 trillion US dollars, but currently, the overall capitalization value has been observed to fall below 1 trillion US dollars or around 901 million US dollars on Wednesday (29/6). This figure is the lowest achievement for the first time since February 2021. This phenomenon of falling market prices for crypto assets is known as a bear market, a cycle that is currently being faced by crypto markets globally. Unlike other asset markets, the cycle of the crypto asset market moves much faster.

In the crypto industry, bear markets are commonplace and only temporary. From this bear market phenomenon, according to Asih Karnengsih, Chairwoman of the Indonesian Blockchain Association (A-B-I) that "bear markets have become commonplace in the crypto space, lastly happened in 2018, and we all know what happened after that, this momentum is a natural process of eliminating players who enter this industry only because of valuation or numbers alone, while the real players are increasingly focusing on building and developing." In addition, there are several factors that have influenced the condition of the crypto asset market in recent months, namely:

Bitcoin (BTC) showed its worst price movement in more than a decade in the second quarter of 2022, with the price of BTC touching $17,600 on June 18.
The fall in the value of Terra and its two assets (LUNA and UST) which were previously crypto assets with a market capitalization of 40 billion US dollars in April, was in the top 10 according to Coin Market Cap. In July, its market capitalization value was only 800 million US dollars. The LUNA coin is down 99% and the stablecoin UST lost its peg value against the US dollar (depeg).
Solana's crypto asset ecosystem, which was in trouble after the discovery of thousands of Solana-based wallets, has been hacked. According to Bloomberg, Elliptic, a blockchain forensics company, said that more than 7,900 of Solana's wallets had been stolen and the loss was estimated at more than 5.2 million US dollars. Meanwhile, PeckShield as one of the security companies said that due to the Solana-based wallet hacking, the victim had suffered a loss of about 8 million US dollars.
Several crypto asset service providers who are in financial trouble due to the current bear market conditions have gone bankrupt, as happened in:

Three Arrows Capital (3AC) was unable to meet its liquidity on June 29 due to a default on crypto loan payments of more than US$650 million.
Celsius Network announced the termination of all drawdowns due to the bankruptcy of illiquid assets. However, Celsius is currently proposing another solution to restructure the company by mining BTC on Monday (18/7).
Vault has also suspended withdrawals for its more than 800,000 customers.
Babel Finance has temporarily suspended the withdrawal and redemption of crypto assets because according to the management, Babel Finance is facing high liquidity pressure.

The existence of financial problems that led to the issue of bankruptcy in the midst of bear market conditions caused several companies that deposited their digital assets in these companies to experience a direct impact. One of them is the Prospective Crypto Asset Physical Trader/Exchange registered with Bappebti/CoFTRA, Zipmex. In its official release, Zipmex explained that it had deposited assets with Babel Finance and Celsius since the beginning of ZipUp+'s operations and had announced a temporary suspension to the process of withdrawing funds and crypto assets. Zipmex has made various efforts to overcome these problems, including fundraising, legal action, and restructuring, and now Zipmex has reactivated the withdrawal of funds and digital assets on Trade Wallet. In addition, since August 2, 2022, Zipmex has also released Solana, Ripple, Cardano, and Ethereum crypto assets from Z Wallet to users' Trade Wallet on a regular basis. Zipmex through its official communication channel also announced that the management has signed three Memorandums of Understanding (MoU) which are part of the restructuring plan by introducing fresh funding to the company through an investor group led by Zipmex's shareholders to keep the company's operations running and maintained their integrity.

Then, what will happen to the future of the crypto market industry? Asih said, "Actually, even from a valuation point of view, 2 years ago the value of bitcoin was around $8000, currently even though it's a bear market, the value of bitcoin reaches $20,000 so it can be seen from a long-term perspective, crypto is here to stay." Oscar Darmawan, as CEO of Indodax also shared his opinion that "at a time of bearish market like this, it is the right moment for investors to collect crypto portfolios".

With the challenges faced by the crypto industry, the regulation from Bappebti/CoFTRA has been very accommodating in terms of consumer security with the necessity of a Crypto Futures Exchange. Malikulkusno Utomo, who is often called Dimas, General Counsel of PINTU, participated in giving his views on the formation of a crypto exchange, according to Dimas "the establishment of a crypto futures exchange can be immediately realized to encourage the advancement of the crypto industry in Indonesia, increase public trust, provide information distribution, and protect the investors, PINTU believes "it is more appropriate if the futures exchange is an exchange that has gone through a series of strict processes and complies with the requirements according to applicable regulations". Oscar also added that he hopes that the relevant government "can soon inaugurate the Digital Future Exchange (DFX) crypto futures exchange which will later serve to help oversee crypto transactions to be more secure and protect crypto asset traders. I am optimistic that the establishment of this futures exchange can advance the crypto ecosystem in Indonesia to be even better".

Deputy Minister of Trade, Jerry Sambuaga said that the establishment of the Indonesian Crypto Exchange is almost complete, "the point is that it is close, hopefully as soon as this year," Jerry said on Thursday (28/7). In terms of the readiness of the DFX consortium, Alex Kim as CEO of Upbit APAC who is part of the consortium said "risk mitigation to institutions regulated and supervised by Bappebti/CoFTRA, when market conditions are bad, business actors and consumers' funds can be protected by this ecosystem. DFX as a prospective crypto exchange is ready to operate and contribute to the Indonesian crypto asset industry ecosystem, in accordance with the mandate of government regulations, especially Bappebti/CoFTRA. This is why we really welcome and look forward to the finalization of the DFX".