Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.
Bradley Keoun is the managing editor of CoinDesk’s Markets team. He owns less than $1,000 each of several cryptocurrencies.
Glenn Ardi is the Managing Director of CoinDesk Indonesia. He has 10 years of experience writing educational, science, and finance articles for various websites.
Join the most important conversation in crypto and Web3 taking place in Austin, Texas, April 26-28.
Good morning. Here’s what’s happening:
Prices: Bitcoin avoids losses in U.S. stocks as strong economic data makes investors reconsider expectations that the Federal Reserve will pivot anytime soon to a more dovish monetary policy.
Insights: Central Bank of Indonesia whitepaper on the development of the country’s central bank digital currency (CBDC) envisions a world with a government-sanctioned payment layer.
Bitcoin dodges stock sell-off
Bitcoin (BTC) was flat over the past 24 hours, on a day where U.S. stocks sold off. Positive economic data rekindled fears that the Federal Reserve may need to keep tightening monetary policy longer than expected – a trend that has put downward pressure on risky asset prices all year. (Check out Glenn Williams Jr.’s analysis here.)
The largest cryptocurrency by market volume was trading above $16,800, down just 0.01% over 24 hours. Ether (ETH), the second largest, was trading around $1,223, up 0.82%. The CoinDesk Market Index was up 0.5%
Messari’s Ryan Selkis, in a 168-page report on his 2023 predictions, wrote the market’s direction is “still all about macro and regulation.”
“The resting market sentiment is that we will have a recession in 2023, with some debate over its potential magnitude. The market also seems to trust that central banks will continue to tighten until inflation is under control. Though contrarian, there are some investors who think it’s more likely that the Fed will pivot once the recession really gets going and accept multi-year high inflation in lieu of a depression or global reserve currency crisis.”
Web3, DeFi at the Center of Indonesian CBDC
By Glenn Ardi, CoinDesk Indonesia
The Central Bank of Indonesia’s whitepaper about the development of the country’s Central Bank Digital Currency (CBDC) stands in contrast to China’s: It envisions a world where the government permits, and controls, Web3 and DeFi by providing a government-sanctioned payment layer instead of trying to eliminate it.
Indonesia’s population has fully embraced crypto. Based on data from the Indonesian Commodity Futures Trading Authority (Bappebti), the number of registered crypto accounts hit 16.3 million as of September 2022, with a year-over-year growth rate of 81.6%.
While the Central Bank of Indonesia sees some negative parts to crypto, such as the ability for it to operate as a “shadow central bank,” it knows it needs to work on keeping up, but also not getting in the way either, and with that it’s developing a digital form of the Rupiah known as Project Garuda, Indonesia’s CBDC. At this point, crypto is too big in Indonesia to ban, so why not work with the industry and provide regulated payment layers, the prevailing logic goes.
“[A] CBDC fills the gap left by existing money by acting as the core instrument for central banks to maintain monetary and financial system stability within digital ecosystem,” a whitepaper from the Bank on the CBDC reads.
The bank envisions a market where crypto exists as part of a broader ecosystem, with onramps to and from CBDC.
(Central Bank of Indonesia)
“Activities within the Web 3.0 ecosystem, including crypto asset transactions, also add to the complexity of controlling financial systems, both in the context of mitigating micro-financial and macro-financial risks,” the paper reads. “Central banks would need to find a future-proof solution to maintain public trust in them with regards to carrying out their mandate in the digital era.”
The Indonesian CBDC, according to the whitepaper, will be the method of settlement for traditional and digital ecosystem including DeFi, the metaverse and Web3. Cryptocurrency is fine, the prevailing thought seems to go, provided that a digital form of the Rupiah is the dominant means of settlement.
This stands in contrast to China’s approach. The country has largely banned most kinds of cryptocurrencies and prohibits crypto transactions almost entirely. The People’s Bank of China whitepaper on its CBDC mentions cryptocurrency as a concern but takes particular issue with stablecoins, saying they will bring “risks and challenges” to the global financial system.
But for Indonesia, stablecoins aren’t a problem. The country already has a handful of Rupiah backed stablecoins such as the BIDR, IDRT, or IDK. A big market for these stablecoins is Indonesia’s large diaspora of migrant workers as overseas remittances is a big source of income for the country.
In theory, a CBDC could be swapped for a stablecoin then sent abroad. This method would also have the benefit of allowing authorities to monitor for tax compliance.
Still, all this is a long way from being finalized. “The current whitepaper is still high level and theoretical and plans to be implemented,” Asih Karnengsih, chairwoman of Indonesia Blockchain Association told CoinDesk. “The implementation of the CBDC will take many stakeholders to be involved and the real challenge will be how to invite these stakeholders to join the CBDC system.”
But there are security risks
A CBDC means that the government would have a lot of information on transactions and users. And Indonesia doesn’t have the best record for IT security.
In January 2022, the Central Bank of Indonesia suffered a ransomware attack that resulted in 74.82 GB of data being leaked. A few months later the country’s national electoral commission was hacked, and the personal information of 105 million Indonesian citizens was sold on the dark web. This comes two years after the same department was hacked, resulting in a leak of 2.3 million voter records.
Considering the government’s poor track record of IT security, is it really a good idea to give them so much more information? A CBDC would have details about every transaction a person makes. What price would that fetch on the dark web?
In case you missed it, here is the most recent episode of “First Mover” on CoinDesk TV:
Sam Bankman-Fried in FBI Custody, Former Associates Plead Guilty: Caroline Ellison, the former CEO of Alameda Research, and FTX co-founder Gary Wang plead guilty to fraud charges in the FTX case, seeming to turn against their former boss Sam Bankman-Fried, who faces similar charges. Bankman-Fried, founder of both the cryptocurrency exchange FTX and the crypto trading firm Alameda Research, is expected to make his first appearance in federal court in Manhattan today.
Sign up for Crypto Long & Short, our weekly newsletter featuring insights, news and analysis for the professional investor.
By signing up, you will receive emails about CoinDesk product updates, events and marketing and you agree to our terms of services and privacy policy.
DISCLOSURE
Please note that our
and
do not sell my personal information
has been updated
.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a
strict set of editorial policies.
CoinDesk is an independent operating subsidiary of
which invests in
and blockchain
As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of
which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG
.
Bradley Keoun is the managing editor of CoinDesk’s Markets team. He owns less than $1,000 each of several cryptocurrencies.
Glenn Ardi is the Managing Director of CoinDesk Indonesia. He has 10 years of experience writing educational, science, and finance articles for various websites.
Bradley Keoun is the managing editor of CoinDesk’s Markets team. He owns less than $1,000 each of several cryptocurrencies.
Glenn Ardi is the Managing Director of CoinDesk Indonesia. He has 10 years of experience writing educational, science, and finance articles for various websites.
