Indonesia is cracking down on financial institutions offering crypto-related services. On Tuesday, the country’s Financial Services Authority (OJK) issued a warning saying that financial institutions are barred from offering and facilitating the sale of digital assets.
The warning comes when the crypto industry in Indonesia is at its peak, following an increase in crypto trading activities in the country over the past year.
Indonesia cracking down on crypto
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The regulatory body published the warning on Instagram, saying,
OJK has strictly prohibited financial service institutions from using, marketing, and/or facilitating crypto asset trading.
The warning noted that cryptocurrencies were highly volatile, and those who want to invest in the sector should understand the risks. Currently, volatility has spiked across the asset class, with the global market cap dropping by nearly half in just two months.
The regulatory body also added that investors needed to be aware of “Ponzi scheme scams” in the crypto industry. Fraudsters are taking advantage of the sector’s rapid growth to find new ways of defrauding new and naïve investors.
The Asian continent has been warning about crypto investments following an influx of crypto trading activities. A similar warning was issued by the central bank of Thailand that warned banks from facilitating crypto trading.
Growth of the crypto market in Indonesia
Digital asset trading has boomed in Indonesia over the past year. In 2021, data from the trade ministry noted that the total number of transactions in the sector was estimated to reach $59.83 billion, equivalent to around 859 trillion rupiah. This is a notable growth, given that the same stood at 60 trillion rupiah in 2020.
The crypto industry in Indonesia is regulated by the trade ministry and the Commodity Futures Trading Regulatory Agency. The ministry of trade is currently setting up a special regulatory body for the digital asset sector. The regulatory body will be known as the Digital Futures Exchange, and it is expected to debut operations before the end of the first quarter.
Despite allowing cryptocurrency trading, Indonesia does not allow the use of crypto assets for payments. This is similar to the restrictions placed in Russia.
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