How do other countries view cryptocurrencies? A Glimpse of Crypto Sentiment in Different Countries

Author: Maung Agus Sutikno Translation: Huo Huo / Vernacular Blockchain

An analysis of sentiment about Bitcoin on Twitter via the NRC Sentiment methodology reveals the attitudes of countries around the world towards cryptocurrencies, especially the United States, India, Indonesia, and Malaysia, while highlighting the strengths and weaknesses of cryptocurrencies as financial tools.

Cryptocurrency sentiment analysis is considered an excellent way to understand how to make informed investment decisions. By using the NRC sentiment method (Saif Mohammad, 2011), the author studied the sentiment in Twitter social media towards Bitcoin as a keyword representing the cryptocurrency.

Most of the countries observed have a positive attitude towards cryptocurrencies. Here we select some countries as samples for analysis: the United States, India, Indonesia and Malaysia.

There are different views on cryptocurrencies as a specific financial instrument, with both advantages and disadvantages. Advantages include: (1) speeding up, reducing costs and significantly simplifying settlements between entities, as the scheme excludes "unnecessary" intermediaries; (2) preventing the inflation process; (3) the issuance of Bitcoin at a It grows at a predetermined rate, which is different from the government printing its own currency.

1. American sentiment towards cryptocurrencies

As a developed country with many applications of cryptocurrency in daily life, the United States has a positive attitude towards cryptocurrency. Businesses such as Tesla, Microsoft, PayPal, Starbucks, Overstock, and AT&T have begun accepting cryptocurrencies, underscoring their growing influence across industries (2).

What Americans Think About Bitcoin

2. Indonesia’s attitude towards cryptocurrency

Indonesians have a positive attitude towards Bitcoin, although Bappepti only recognizes it as a commodity and not a currency. As the country with the largest Muslim population in the world, Indonesia, represented by the Muslim scholar institution MUI, believes that "cryptocurrency is illegal as a digital commodity or asset because they contain uncertainties and are harmful."

Despite the tax benefits it brings to governments, Islam's views on cryptocurrencies make it a controversial financial instrument. **In addition, “Given the substantial risks and instability involved in dealing with these currencies, the Council recommends further study and review of issues affecting governance.” . **

Indonesian Government’s Cryptocurrency

Treasury is more profitable than some cryptocurrency investors. It turns out that the amount of crypto asset taxes collected by the Indonesian government has reached tens of billions. This is despite the fact that the government's policy of imposing these taxes has only been in place for about a month.

**What are the cryptocurrency taxes in Indonesia? **Bisnis said that as of July 29, 2022, the government had collected up to IDR 48 billion in tax revenue from crypto asset transactions, including income tax (PPh) and value-added tax (PPN). During the state budget press conference, Finance Minister Sri Mulyani Indrawati directly announced the total amount of government revenue from crypto assets. She explained that the government has imposed taxes on crypto assets circulating in Indonesia since May 1, 2022. Sri Mulyani said: “We also imposed a cryptocurrency tax, PPh got 23.08 billion rupiah, and the domestic PPN totaled 25.11 billion rupiah.”

**Regulations related to tax on cryptocurrencies Finance Minister’s Regulation (PMK) No. 68/PMK.03/2022 on Value Added Tax and Income Tax on Cryptoasset Transactions regulates the taxation of cryptocurrencies. The government believes that cryptoassets have expanded widely and become traded commodities, making them eligible for tax. **The policy stipulates that the imposition of VAT applies to sellers delivering cryptoassets, providing electronic facilities for cryptoasset transactions, and providing verification services for cryptoasset transactions and/or services related to the management of a group of cryptoasset miners (mining pools).

What Indonesians think about Bitcoin

3. Malaysia’s views on cryptocurrency

Comparing Malaysia’s sentiment towards cryptocurrencies with Indonesia’s dual banking system (conventional banks and Sharia law) reveals that Malaysians also have positive sentiments.

Malaysia and Indonesia, as Muslim countries, have become representatives of the Muslim world. Interestingly, the Muslim world now divides the pros and cons of cryptocurrencies.

Pros: Amalin (2018) believes that cryptocurrency meets the needs of currency exchange because it has transparent and clear transaction regulations. It does not include usury, which is prohibited in Islamic teachings. Cryptocurrencies and Tokens are allowed as currencies and are also consistent with the custom of exchange transactions.

Disadvantages: The development of the shadow economy leads to tax evasion, which fundamentally undermines the idea of an intact state, insecure cryptocurrencies, the inability to trace the participants of financial transactions (anonymity, laundering of proceeds of crime, criminal financing, fraudulent activities, etc.). High exchange rate volatility, lack of interest redistribution mechanisms to address social challenges, loss of data in cryptocurrency wallets, resulting in the inability to withdraw financial assets from them in any other way; regulatory uncertainty, including illegal behavior in some countries; and cryptocurrency production The increasing complexity of the process.

What Malaysians think about Bitcoin

4. Indians’ views on cryptocurrencies

An interesting finding is the negative sentiment towards cryptocurrencies in India. This contradicts the fact that a key indicator of growing cryptocurrency acceptance is that nearly one in 10 Indian adults is now actively participating in the cryptocurrency economy. Future research may need to find the missing link between the two contradictions.

What Indians think about Bitcoin

5. Market efficiency

The magnitude of cryptocurrency volatility and market volatility relative to other financial markets has fueled debate in the fields of economic theory and behavioral science about how markets process information. That said, the efficient market hypothesis (EMH) has been evaluated in cryptocurrency markets and its applicability to price mechanisms in relatively nascent financial markets.

Note: Research methodology

The research methodology used NRC sentiment (Saif Mohammad, 2011) with an observation period of 1 January 2022 to 12 December 2022. By analyzing feeds for the keyword "bitcoin" on social media sites such as Twitter, the study only analyzed English. Therefore, in terms of longer observation period, more linguistic analysis, and more keyword research, this will be a potential research area in the future.

This study chose Twitter as a social media platform because the paper recommends the use of Twitter as a social media platform due to the high frequency of cryptocurrency-related tweets. On the other hand, the frequency of news feeds is relatively low, but it still affects cryptocurrency prices.