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Determining the Fate of Cryptocurrencies

Navigasi - 2022 is a special year for Indonesia, because this is the year Indonesia holds the G20 Presidency. The G20 Forum is an inter-state forum that aims to find common solutions to global economic problems. The G20 is also the most important economic forum in the world because it represents 80 percent of the world's GDP and 75 percent of international trade.

Determining the Fate of Cryptocurrencies
Determining the Fate of Cryptocurrencies

This year, the G20 Presidency raised the theme “Recover Together, Recover Stronger” with the hope that all countries in the world will participate and work hand in hand to recover together and grow stronger as the noble value believed by this nation, namely mutual cooperation.

The issues that are the priority of discussion at the G20 2022 Presidency are Global Health Architecture, Sustainable Energy Transition, and Digital and Economic Transformation. The three priority issues were taken with the hope of achieving a speedy economic recovery and preventing pandemics in the future.

With the top agenda in the form of a High Level Conference (Summit) which will be attended by all heads of state, this year's G20 is expected to be able to solve global problems and encourage the world economy to move in a better direction.

One of the economic problems that will be discussed in this forum is related to cryptocurrencies. Cryptocurrency is a digital currency designed as a medium of exchange through a computer network that is not issued by any central authority so that it is theoretically immune to government interference or manipulation.

One example of a cryptocurrency is Bitcoin--which is considered the parent of cryptocurrencies. Bitcoin is a decentralized digital currency that can be traded and exchanged directly, without going through intermediaries such as banks. Bitcoin was created with the motive of the need for an electronic payment system based on cryptographic evidence, not trust.

In contrast to cryptocurrencies, the current currency issuance system uses a trust system, because the current currency is issued and guaranteed for use by the government or central bank and the public "believes" that the money used is valuable because of the guarantee. With these differences in systems, cryptocurrencies are considered to have a potential threat to the stability of the current global financial system.

In Indonesia, crypto is legally owned as a digital asset, but it is illegal to use it as currency. This is supported by the issuance of the Minister of Trade Regulation Number 99 of 2018 and CoFTRA Regulation Number 7 of 2020 which essentially regulates the trading of crypto “assets”.

On the other hand, Bank Indonesia prohibits the use of crypto as a currency in accordance with Law Number 7 of 2011 and Bank Indonesia Regulation Number 17 of 2015 which essentially requires the use of rupiah as a medium of exchange or transaction instrument. So it can be concluded that in Indonesia, Bitcoin and the like are more accurately referred to as crypto assets than cryptocurrencies.

In line with Indonesia, the European Union also considers Bitcoin and other cryptocurrencies as legal assets to own, but the European Banking Authority (EBA), states that the use of crypto assets is beyond their control and continues to try to warn the public about the risks of using crypto assets.

The United States as the country with the largest economy in the world has also legalized crypto ownership. The United States Department of the Treasury (The U.S. Treasury) classifies cryptocurrencies as virtual currencies that have a value equivalent to currency and can serve as a substitute for currency. In terms of taxation, the United States Tax Authority (IRS) considers cryptocurrencies to be property so they can be taxed on capital gains.

The only G20 member country that has banned the circulation of cryptocurrencies is China. China prohibits all activities related to cryptocurrencies, both trading and mining activities. A complete ban on all activities related to cryptocurrencies by China could have a significant impact on crypto owners around the world, considering that the country is the second largest economic power in the world.

It is feared that a total ban on activities related to cryptocurrencies will hamper the progress of digital technology, especially in the economic field. However, leaving cryptocurrencies unregulated can put society in danger and uncertainty.

The state as a regulator is expected to be able to provide rules that on the one hand protect people's rights and on the other hand are also able to encourage the advancement of digital technology. This is certainly not an easy matter, so in-depth research is needed on any regulations that will be issued, especially those related to cryptocurrencies.

As one of the 1000 Young Indonesian Aspirations, at this year's G20 forum, I hope there will be an agreement from all G20 members regarding the fate of cryptocurrencies that will provide legal certainty to cryptocurrency owners around the world and also provide a sense of security for everyone who uses it.