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Indonesian crypto exchange Reku turns profitable in 2024

Published on May 15, 2024

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In the wake of the FTX collapse in late 2022 and subsequent crypto contraction, The Atlantic boldly published a think piece titled “You Can Forget About Crypto Now.” Sure enough, the doom and gloom outlook on digital assets was palpable for more than a year thereafter

Meanwhile, AC Ventures Founding Partner Pandu Sjahrir asserted on an episode of Indonesia Digital Deconstructed that crypto “remains intact as an asset class.” Fast forward 15 months. Jesse Choi of the Indonesian crypto exchange Reku, backed by ACV, recently joined the podcast to report that his company has become profitable.

“I’m pleased to share that the first quarter of 2024 has been our strongest in the last two and a half years, both in terms of trading volume and financial outcomes. Not only was it our best quarter for volume, but it was also exceptionally profitable. Our profit margins exceeded 50%, which marks a significant achievement for us. We are incredibly pleased with these results,” said Jesse, who co-founded the exchange and serves as co-CEO. 

Scheduled halving and the BlackRock effect

The significant resurgence in the crypto market in 2024, particularly with Bitcoin reaching all-time highs, can be primarily attributed to two major factors: the Bitcoin halving event and the legitimization of the crypto sector at large via the introduction of BlackRock’s Bitcoin ETF.

The Bitcoin halving, a scheduled event that reduces the reward for mining new blocks by half, occurred earlier in the year. This reduction in the rate at which new Bitcoins are introduced led to an increase in price, as the reduced supply with steady or increasing demand tends to push prices higher. The market has closely watched this halving and is seen as a bullish event for Bitcoin’s value.

In parallel, the launch of BlackRock’s Bitcoin ETF has played a critical role in legitimizing crypto within the institutional financial landscape. The ETF allows for more institutional and retail investment exposure, increasing Bitcoin’s liquidity and integrating it into the broader financial market. 

BlackRock’s move has been particularly potent due to its stature as the world’s largest asset manager, adding a layer of credibility and stability to the crypto market that was previously perceived as too volatile and risky for most investors. The ETF not only simplifies investment in Bitcoin but also promises more accurate price tracking and potentially lower fees relative to other investment methods.

These developments have collectively spurred a bullish sentiment across global crypto markets, leading to increased adoption and investment, both from institutional investors and retail traders, thereby driving the price of Bitcoin to new heights.

When asked what these things mean for exchanges like Reku, Jesse said, “Significant price movements in Bitcoin often lead to increased overall market activity, which is generally positive for us at Reku. This has been particularly evident in the last two quarters—Q1 of 2024 and Q4 of 2023—where we experienced some of the highest trading volumes in our history. As an exchange operating on a volume-based revenue model, these periods of heightened activity have contributed substantially to our financial performance, making these quarters very successful.”

Regulatory and institutional legitimization

Jesse went on to address regulatory trends in the digital assets market, highlighting the evolving landscape across various jurisdictions, with a particular focus on Southeast Asia. He noted that while the US tends to lead in the formulation and implementation of digital asset regulations, other regions are also making strides. According to Jesse, most countries are moving toward more positive regulatory frameworks, which not only foster adoption but also further enhance the legitimacy of the crypto space.

He specifically mentioned Hong Kong’s proactive efforts to establish itself as an Asian crypto hub, which is indicative of the region’s forward-thinking regulatory approach. Meanwhile, in Indonesia, regulatory responsibilities are soon transitioning from the Commodity Futures Trading Regulatory Agency (BAPPEBTI) to the Financial Services Authority (OJK). This shift signals a recognition of crypto as a legitimate financial instrument in the archipelago and indicates a move toward stricter regulation – which Jesse confirms is a good thing for Reku.

The move is part of a broader trend where governments are increasingly affirming their stance on digital assets, often with a collaborative and open approach to regulation and innovation. For instance, the inauguration of Indonesia’s “Crypto Literacy Month” by the government, featuring prominent figures from the community, underscores the market’s commitment to educating the public and integrating digital assets into the mainstream financial ecosystem.

A hedge against inflation

This regulatory progression is critical, as it not only shapes the operational landscape for companies like Reku but also affects the broader adoption and integration of crypto into global systems.

Jesse reflected on the evolution of Bitcoin’s role and perception in the financial landscape, noting clear shifts in how it is viewed and utilized, suggesting that Bitcoin is now often compared to gold – seen as a hedge against inflation. 

He said, “As we consider the trajectory of Bitcoin, it’s clear that the narrative surrounding its purpose has evolved. Initially regarded as a form of decentralized money, Bitcoin’s role has increasingly come to be defined as a store of value rather than a medium for transactions. With its integration into more formal financial structures, such as the emergence of ETFs, and its broader acceptance by various governments and global institutions, Bitcoin is demonstrating that it can be a resilient and valuable asset class, even in the face of economic fluctuations.”

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