Cryptocurrency has grown in popularity, and Indonesian regulators are still trying to catch up. Hence, foreign investors interested in this untapped market should be mindful of the present regulatory environment around cryptocurrencies.
This article will summarize the existing regulation regarding the cryptocurrency market in Indonesia.
Is Cryptocurrency Legal in Indonesia?
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.
Indonesia Recognizes Cryptocurrency as a Trading Commodity Only
The Ministry of Trade Regulation No. 99 of 2018 formally authorized crypto asset trading and decreed it lawful. Furthermore, the Indonesian Commodity Futures Trading Supervisory Authority, or Bappebti, published Regulation No. 5 of 2019 to provide a thorough regulatory framework for the crypto-assets future.
According to data from the Blockchain Association of Indonesia, the number of investors has risen by 280% since 2020, from 1.5 million to 4.2 million, with a daily trading volume reaching USD 117.4 million.
These Bappebti Regulations in Indonesia have made significant progress toward building a comprehensive legal framework that will guarantee that the crypto sector thrives in the country, even if it is not yet accepted for payment.
Existing Cryptocurrency Regulations in Indonesia
- Bappebti Regulation No. 7 (2020): Bappebti has compiled a list of 229 crypto assets that may be traded lawfully on future exchanges.
- Bappebti Regulation No. 5 (2019): Bitcoin has been recognized as a commodity and the regulatory standards for cryptocurrency exchanges also has been classified.
In addition to the 229 cryptocurrencies that will be traded in Indonesia, Bappebti Regulation No. 7/2020 defines prospective crypto-assets physical traders (calon pedagang fisik aset kripto) and crypto-assets physical traders (pedagang fisik aset kripto) as platforms where customers can buy and sell crypto-assets.
Bappebti additionally establishes the following responsibilities for crypto-asset physical traders in the same regulation:
- establish standard operating procedures for monitoring and evaluating the crypto-assets exchanged by the trader;
- the crypto-assets being exchanged by the crypto-assets physical trader are monitored and assessed independently and actively;
- actively report to Bappebti, the Cryptoassets Futures Exchange, and the Cryptoassets Committee the outcomes of the monitoring and assessment of traded crypto-assets;
- unilaterally impose limitations on crypto-assets that fail to meet the trader’s risk standards.
Cryptocurrency Indonesia: Requirements for Foreign Investors
Since Indonesia presently lacks a crypto-asset future exchange, the Bappebti registration is temporarily closed. Crypto-asset trading, on the other hand, is expressly regulated to be available to all international investors. An investor must meet the following requirements in order to become a Bappebti certified Crypto-Asset Physical Trader:
- have at least IDR 50 billion in paid-up capital;
- retain a minimum of IDR 40 billion in equity;
- have acquired a PSE accreditation (Electronic System Provider or Penyelenggara Sistem Elektronik) from the Ministry of Communication and IT for their system;
- having a business strategy in place for the next 24 months, as well as financial projections;
- Bappebti’s system requirements must be met.
How Can Cekindo Help?
Setting up a business in Indonesia can be lucrative, but it also presents several hurdles. Cekindo registers your company with the least hassle, while you focus on the core business aspect of your company. Cekindo conducts due diligence and market research to rule out any loopholes. We also provide legal consultation and ensure that you stay on top of legal compliances, along with helping you with the acquisition of business licenses.
To know more about how Cekindo’s solutions can help you make investments in Indonesia, please fill out the form below or talk to an expert on our chatbot.