Crypto action heats up in Indonesia as Luno mulls market entry, Tokocrypto weighs IPO

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In what seems to be signs of the rise of cryptocurrency in Indonesia, the global cryptocurrency exchange Luno is said to be weighing its entry into the SE Asian market. At the same time, Binance-backed local operator Tokocrypto is looking at a public market debut.

Luno is understood to be in talks with conglomerate Lippo Group to set up a joint venture to start its operations in the country, according to two people familiar with the development.

Based in London with regional hubs in Singapore and Cape Town, Luno was last year acquired by Digital Currency Group (DCG) that builds, buys, and invests in blockchain companies. Luno operates as an independent, wholly-owned subsidiary of DCG.

Talks between Luno and Lippo Group are at an initial stage, people mentioned above added. Luno’s early investor Venturra Capital, which is backed by Lippo Group, is said to be supporting the JV plans.

Industry sources indicate that both Luno and Lippo will contribute equally to the venture. The initial capital requirement for the exchange is said to be under $10 million. The parties are in the process of obtaining a licence for their venture, the sources added.

In an email response, a Venturra Capital spokesperson told DealStreetAsia, “Venturra has been an early supporter at Luno since we led their Series A in 2015. We plan to continue the working relationship and support, even after the acquisition by DCG, especially in Indonesia.” Venturra, however, refrained from specifically commenting on the deal between Lippo and Luno.

Luno has yet to respond to a DealStreetAsia query seeking comment.

Meanwhile, Indonesia’s first regulated cryptocurrency exchange TokoCrypto is looking at a public market debut over the next 2-3 years.

TokoCrypto CEO Pang Xue Kai said, “I’m saying two years because we need to be profitable for at least more than two years before listing. We are already profitable now.” 

“Our key focus at Tokocrypto is to grow the business further, expand our operations to more parts of Indonesia and make crypto mainstream in the country.”

Tokocrypto has clocked $10 million in annualized profits as of date based on 0.1% transaction fees charged on trading volume on the exchange platform.

“Valuation wise, it is premature [to talk about] as it is [an IPO] still 2-3 years down the road but a close reference would be Coinbase of US. Currently, we are monitoring the market, scaling the business, building the team and products,” Kai added.

Founded in 2018, Tokocrypto, which is backed by cryptocurrency exchange major Binance and QCP Capital, is regulated by the Indonesian government through the Ministry of Trade on the Commodity Futures Trading Regulatory Agency.

Tokocrypto launched its token offering (TKO) on the Binance platform last month. Around 200,000 people participated in the offering and committed around $4.2 billion, claims the company.

Tokocrypto said it holds approximately $1 billion worth of TKO tokens and has 800,000 users, and it claims to acquire a new user every five seconds.

The TKO token holders gain access to trading fee discounts, airdrop entitlements, merchandise redemption, and incentives for mass adoption.

TKO tokens can be used in Decentralised Finance programmes such as TKO Deposit, TKO Savings, and TKO Cashback. TKO tokens will be the backbone of the NFT marketplace (TKONFT Arcade) and the payment gateway between creators and their audiences. TKO NFT Arcade is a marketplace for digital collectibles and creative assets from emerging artists.

Growing market

Indonesia is slowly emerging as a hot spot for crypto-related action if government data is an indicator. The value of crypto assets trading in the country amounted to Rp64 trillion ($4.44 billion) in 2020, per the data. In the first two months of 2021, the value of crypto assets trading in the country breached the Rp6 trillion ($410 million) mark.

The number of cryptocurrency traders in Indonesia is estimated at 4 million and is expected to grow exponentially given the size of the country’s population at 275 million, industry watchers predict.

In terms of funding activity, Jakarta-based crypto exchange Pintu made headlines last week for raising $6 million from a slew of investors including Pantera Capital and Intudo Ventures to build brand awareness, ramp up headcount, and develop new features.

The biggest challenge that industry players face is the lack of understanding and awareness related to blockchain technology.

In Indonesia, crypto is not recognised as a means of payment but as an asset or commodity traded on future exchange hence it is not very widespread, industry players point out.

“However, with the ongoing crypto hype, it is not that hard for us to convince investors and retailers to invest in crypto assets. We have around (120,000 weekly active traders) and it is growing all the time which shows that the adoption of crypto assets is increasing day by day, especially in Indonesia,” says Afid, a trader on the Tokocrypto platform.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.