Crypto Regulations in Indonesia
In Indonesia, virtual currencies are not considered legal tender. In 2019 the Indonesian Commodity Futures Trading Regulatory Agency (Bappebti) approved regulation no. 5/2019,94 which legally recognizes and regulates bitcoin and other cryptocurrencies as commodities. Derivative transactions and cryptocurrency exchanges are also subject to the regulatory requirements of Bappebti.
The regulation defines a crypto asset as “an intangible commodity in the form of a digital asset that uses cryptography, a peer-to-peer network, and distributed-ledger technology to regulate the creation of new units, verify transactions and ensure transaction security without the involvement of a third-party intermediary.” Bank Indonesia, the country’s central bank, has banned the use of cryptocurrencies as a payment tool. Indonesia has also banned financial firms from facilitating crypto sales. Indonesia’s Financial Services Authority (OJK) said it has “strictly prohibited financial service institutions from using, marketing and/or facilitating crypto asset trading,” the regulator said in a statement95 posted on Instagram. The ministry is facilitating the establishment of a separate bourse for digital assets, called the Digital Futures Exchange, which officials say will be launched in the first quarter of 2022. It warned that the value of crypto-assets often fluctuates and that people buying into digital assets should fully understand the risks. The warning follows similar concerns by the central banks of Thailand96 and Singapore97.
Source: Thomson Reuters
The Indonesian currency is determined by law, according to Article 23B of the country’s constitution, and the currency legislation of 2011 mandates that nearly all financial transactions in Indonesia be conducted in Rupiah, the country’s only recognized currency. Only International transactions, government spending, and bank deposits are exempt.
The purchase and selling of cryptocurrencies in Indonesia are only authorized for investment reasons or for legally specified crypto assets, according to the country’s legislation. However, the central bank recently underlined that cryptocurrencies are not a valid method of payment. Banks are forbidden to facilitate the use of cryptocurrency as a form of payment.
Source: Cekindo
Crypto trading activities in Indonesia is generally allowed by the prevailing laws and regulations, despite of the currently prevailing restrictions on the use of cryptocurrencies/ virtual currencies as payment instruments. With the recent surge in popularity of Non-Fungible-Tokens (“NFT“), public interest in crypto assets in Indonesia is on the rise. Legality is often debated and many people are interested to learn more.
In Indonesia, crypto assets are regulated under the following regulations:
- Ministry of Trade Regulation No. 99 of 2018 on General Policy for Future Trading of Crypto Asset (“MoT Regulation 99/2018“);
- Commodity Futures Trading Supervisory Agency (Badan Pengawas Perdagangan Berjangka Komoditi or “BAPPEBTI“) Regulation No. 5 of 2019 on Technical Provisions on the Implementation of Physical Market of Crypto Asset in Futures Exchange, as lastly amended by BAPPEBTI Regulation No. 8 of 2021 on Guidelines of the Implementation of Physical Market Trading of Crypto Assets on Futures Exchanges (“BAPPEBTI Regulation 8/2021″); and
- BAPPEBTI Regulation No. 7 of 2021 on Decree on the List of Tradeable Crypto Assets in the Crypto Asset Trading Market.
In this article, we will elaborate on the key points of the legal development of crypto-assets trading in Indonesia.
Source: Mondaq
Indonesia’s Financial Services Authority (OJK) on Tuesday warned that financial firms are not allowed to offer and facilitate sales of crypto-assets amid a boom in crypto trading in Southeast Asia’s largest economy.
“OJK has strictly prohibited financial service institutions from using, marketing, and/or facilitating crypto asset trading,” the regulator said in a statement posted on Instagram.
It warned that the value of crypto assets often fluctuates and that people buying into the digital assets should fully understand the risks.
Source: Reuters
The Indonesian government has been planning for some time to impose tax levies on the digital world as it saw the potential of tax income from this field. Throughout 2020-2021, the government has issued several tax regulations for e-commerce transactions, including the imposition of value-added tax (VAT) for trading through the electronic system. Recently, the government issued other regulations targeting the financial digital and crypto markets, as well as establishing detailed procedures for levying VAT and income tax. This article briefly discusses important matters in the regulations.
The Ministry of Finance issued regulation No.68/PMK.03/2022 (PMK 68) on VAT and income tax of crypto-assets trade transaction, effective from 1 May 2022. The following are subject to the imposition of VAT:
- Intangible taxable goods in the form of crypto assets by the crypto assets’ sellers. This includes the sale and purchase of crypto assets with fiat money, the swapping of crypto assets, and/or the swapping of crypto assets with other goods and/or services.
- Taxable services in the form of the provision of electronic facilities for crypto assets trading by the organiser through the electronic system, or penyelenggara perdagangan melalui sistem elektronik (PPMSE). This includes the provision of services for the sale and purchase of crypto assets with fiat money, the swapping of crypto assets, e-wallet services for the deposit, withdrawals or transfers of one crypto asset to another party’s account, and the management of the media for the storage of crypto assets.
- Taxable services in the form of transactions involving the verification of crypto assets services and/or management services of the mining pool of crypto assets.
Source: Law Asia
Indonesian digital asset traders will have to pay new taxes on their transactions starting this May, a tax official has revealed, even as the trading volume in the country soared to $60 billion in 2021.
Directorate General of Taxes official Hestu Yoga Saksama announced the new taxes in a media briefing recently. The taxman will impose a value-added tax (VAT) on digital asset transactions and an income tax on capital gains from such investments at 0.1% each from May 1, he said.
Indonesia has become one of Asia’s biggest digital asset markets in recent years. According to the country’s Ministry of Trade, digital currency transactions shot up to 859 trillion rupiahs ($59.83 billion) in 2021, up from 60 trillion rupiahs ($4.1 billion) in 2020.
Source: Coingeek
Indonesia allows sales of crypto assets in the commodities exchange and trading is supervised by the trade ministry and the Commodity Futures Trading Regulatory Agency, not by the OJK.
The ministry is currently facilitating the set up of a separate bourse for digital assets, called the Digital Futures Exchange, which officials say will be launched in the first quarter.
However, cryptocurrencies cannot legally be used for payments in the country.
Source: Reuters
Until March 2022, there have been 17 companies registered and permitted by BAPPEBTI to exchange cryptocurrencies in Indonesia, with their userbases rapidly increasing. A market leader, Indodax reported reaching 5 million members in 2022, a 104% increase compared to 2021. Another prominent exchange, Tokocrypto, had reported reaching 2 million members by the end of 2021, an eightfold increase compared to 2020.
Indonesia’s crypto community is also growing beyond just exchanges. The Indonesia Blockchain Association, a local consortium and advocacy group for blockchain and cryptocurrencies, has 28 member companies and organizations as of 2022. The association comprises not only exchanges but also startups and tech companies using blockchain in their ecosystem and media platforms specializing in crypto.
Source: Cointelegraph
Indonesia, Nigeria, the US, and Vietnam, have some of the highest victim rates for crypto scams, Director of Security at MyCrypto, Harry Denley, told Decrypt.
Source: Decrypt
The end of Q2 2021 brought on an additional $329 million in Defi-related hacks and fraud. With the addition of $35.6 million from the first month of Q3, 2021’s year-to-date total is now over $471 million at the time of this report. These DeFi crimes can generally be broken down into two categories: either a hack of a DeFi protocol by outside agents, or a rugpull conducted by insiders. A majority of the DeFi volume netted by criminals in 2021 appears to have been conducted by outside agents as DeFi-related hacks make up $361 million—76% of all DeFi-related crime at the time of this report. The remaining 24% are rug pulls tallying over $113 million year-to-date.
Source: Ciphertrace
Not Available
Regulatory sandboxes are generally a closed testing environment designed for the safe experimentation of new technologies which are not subject to current legislative protection. One benefit of participating in the OJK regulatory sandbox is the temporary exemption from non-prudential OJK regulations.
Once the OJK determines that it has jurisdiction to regulate the fintech firm under POJK13/2018, it will decide if the fintech used by the fintech firm qualifies for the OJK regulatory sandbox (qualifying fintech). A qualifying fintech must, among others, be attempting to implement a new business model, have wide market coverage, and be a member of the Indonesian Fintech Association (Aftech).
Source: Conventuslaw
