Back on January 13th, Bank Indonesia issued a statement of caution to the nation proscribing trading Bitcoins. The institutions warned that cryptocurrency is illegitimate in the country.
Less than eight months later, over 1 million Indonesians actively buy and sell Bitcoin. There is so much potential for cryptocurrency in the country that Coinhako launched its trading platform early this month. Based in Singapore, the start-up operates a trading platform as well as e-wallet services for Bitcoin (BTC-USD) and other altcoins.
The company’s co-founder Yusho Liu told the Nikkei Asian Review that the “real prize” is in the payments sector. According to official statistics, majority of Indonesians do not have bank accounts. “I think [the unbanked] is where cryptocurrency can have impact,” Liu notes.
Illegal but happening
Although cryptocurrency trading is officially illegal, Coinhako operates without problems. Early this week (August 27), Coinone became the first Korean exchange to venture across the border into Indonesia. The firm announced in a press statement that it has officially kicked off operations in Indonesia. The news comes two months after the startup launched a beta service in the country. At the time, the aim was to test the cryptocurrency “waters” for their depth and dangers.
The startup reveals that it will support trades in seven major digital tokens. The company further details that it will decide if and when other altcoins will trade on its platform.
The Indonesian Fintech Association observes that the two startups are only two among hundreds of others that are in Indonesia. It estimates that about 200 startups are in the country operating on e-payment, and other crypto-related services. Bank Indonesia has given out about 31 licenses for e-payment providers and 60 others for peer-to-peer lending firms.
Ups and downs
Data available from Indonesia’s Financial Services Authority (FSA) indicates that disbursement of credit through fintech has reached IDR7.8 trillion ($534M). The funds come from 66 local P2P companies that hold licenses from Indonesia’s FSA. The growth in fintech companies indicates a fertile ground in which cryptocurrency firms can thrive.
However, the crypto firms will have to contend with Bank Indonesia’s policies that restrict market access. The institution has in the past suspended e-wallets.