Tuhu Nugraha, IADERN principal, believes Indonesia’s lengthy, complex registration process hinders the growth and innovation of its cryptocurrency industry.
Through stringent clearance procedures, Indonesia is attempting to protect users and capitalize on the economic possibilities of cryptocurrencies. However, according to Tuhu Nugraha, principal of the Indonesia Applied Digital Economy and Regulatory Network (IADERN), its licensing framework is causing stakeholders some concern.
The Physical Crypto Asset Trader (PFAK) license in Indonesia, which permits businesses to trade cryptocurrencies and offer crypto services, presents specific difficulties, according to Nugraha, who also serves as an advisor to that nation’s government.
Only a small number of people own the license, the executive told Cointelegraph, raising concerns about establishing “monopolistic or oligopolistic market conditions.”
A market structure known as an oligopoly occurs when a small number of firms control most of the market. It will be challenging for new businesses to break into this market.
The crypto market may be “dominated” by a few firms.
Tokocrypto, a Binance affiliate, obtained a PFAK license from Indonesia’s Commodity Futures Trading Regulatory Agency (Bappebti) on September 9. CEO of Tokocrypto Yudhono Rawis noted in a statement that the business is only the “third” in Indonesia to obtain the license.
According to Nugraha, customers have fewer options because few people hold licenses, which could increase costs. He clarified:
“There is a risk that these players may dominate the market, limiting consumer choices and leading to higher transaction fees. Such a scenario could ultimately stifle innovation and reduce the competitiveness of the Indonesian crypto market.”
Numerous exchanges are presently awaiting permission, according to Nugraha. The executive continued by saying that the lengthy and intricate registration procedure hindered the introduction of additional exchanges into the market. This “hampers growth and innovation in Indonesia’s crypto ecosystem,” according to him.
Nugraha continued, “This drawn-out approval process can hurt the competitive landscape, making it hard for smaller or newer exchanges to thrive.”
High capital needs put smaller exchanges at a disadvantage.
Nugraha added that acquiring a PFAK license in Indonesia entails significant monetary needs. According to the executive, this poses a substantial obstacle for smaller local exchanges that aspire to become regulated. Nugraha declared:
“The substantial financial commitments needed for these requirements limit the participation of smaller market players, leading to reduced competition and potentially hindering the diversification of services within the sector.”
Although Indonesia has a framework for regulating cryptocurrencies, Nugraha continued, there is still a lack of legal clarity in some areas of the legislation, which raises questions for investors and market players.
“This uncertainty, in addition to current regulatory changes, may discourage additional investment and obstruct the industry’s overall growth,” he continued.
