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Binance searches for a new home in Indonesia

Written by Khamila Mulia Published on     3 mins read

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The new joint venture with MDI Ventures comes amid challenges in other Southeast Asian countries.

On December 15, Binance announced the formation of a new joint venture in Indonesia with MDI Ventures. The JV aims to elevate the blockchain ecosystem in the country by building a new exchange platform for which Binance will provide management infrastructure and technology. MDI Ventures is the venture capital arm of Indonesia’s main telecommunications provider, Telkom Indonesia.

Binance already has a presence in Indonesia, as it became a backer of crypto exchange platform Tokocrypto in May 2020. However, it remains unclear how the new JV with MDI will operate, as Binance and Telkom Indonesia have yet to release more details. When contacted by KrASIA, Donald Wihardja, CEO of MDI Ventures, said that he could not provide any information about the venture until it completes the licensing process.

With this new project, Binance appears to be strengthening its business in Indonesia, especially after facing headwinds in a number of Southeast Asian countries. The company was also rumored to be in talks for a potential partnership with the Hartono brothers, who are part of the country’s richest family, the largest shareholder of Bank Central Asia (BCA), and owners of tobacco company Djarum. However, BCA has denied its involvement.

Binance has had a tough year as regulators around the world are concerned that crypto trading could be a means for money laundering or even a source of financing for terrorism.

In early July, Thailand’s Securities and Exchange Commission filed a criminal complaint against Binance for operating a digital asset exchange without a license. That same month, the Securities Commission of Malaysia also ordered the company to disable its website and mobile app in the country from July 26 onwards, as it lacked the required license.

More recently, Binance withdrew an application filed with the Monetary Authority of Singapore (MAS) for a permit to operate a cryptocurrency exchange in the city-state, as the firm didn’t meet MAS’s criteria for safeguarding against money laundering and terrorism financing. Binance faces regulatory scrutiny in other markets, such as Hong Kong, Japan, Germany, and the United Kingdom.

With these regulatory headaches, Binance is constantly searching for a new home. The company may have identified potential in Indonesia, where crypto has been gaining popularity in the past year. “In Indonesia, crypto is seen as a commodity, not a currency or financial asset. So far, the regulation is quite welcoming for crypto platforms. Nonetheless, the authority is monitoring the development closely because this is a new industry that requires a lot of experimentation. This is similar to the start of fintech lending a few years ago,” Wihardja told KrASIA.

Tokocrypto CEO Pang Xue Kai shares the same sentiment, as he believes that crypto regulation in Indonesia is sufficient to support the growth of this nascent sector. “What we need is a healthy dynamic between the industry and the regulator to work together and legitimize the crypto industry,” Pang told KrASIA. “We have witnessed how some other countries cracked down on crypto, which might alarm us at first, but it also gives us an opportunity to be the breeding ground for crypto innovation.”

As the crypto landscape continues to grow, it will bring about more efforts and initiatives from stakeholders to prevent fraud, scams, and other risks associated with cryptocurrency, Pang explained.

Binance founder and CEO Changpeng Zhao, also known as CZ, said in a statement that the company aims to grow the blockchain and cryptocurrency ecosystem globally. Its latest initiative with MDI Ventures and Telkom is a significant step in that direction. “With fast technology adoption and strong economic potential, Indonesia could become one of the leading centers of the blockchain and crypto ecosystem in Southeast Asia,” said CZ.

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