Summary Checklist of Cryptocurrency Indonesia
- Indonesia legalises crypto-asset as a commodity;
- Crypto-asset trading activities are conducted on Futures Exchange (Bursa Berjangka);
- Crypto-asset is not a valid and legal means of payment in Indonesia;
- Financial services institutions cannot engage in cryptocurrency activities;
- Crypto-asset trading is open to foreign investors. However, the Bappebti registration is currently closed;
- Utility-based crypto-assets can be traded if their value of market capitalization is included in the top 500 crypto-asset market capitalization (Coinmarketcap);
- The minimum paid-up capital to become a Bappebti certified Crypto-Asset Physical Trader is IDR 50,000,000,000;
- Crypto-Asset Physical Traders must have already obtained the PSE certificate (Electronic Certificate Provider or Penyelenggara Sistem Elektronik) for their system from the Ministry of Communications and IT pre-registration.
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Introduction of Cryptocurrency Indonesia
Over the past few years, cryptocurrency has gained the attention of many people all over the world, including Indonesia. As of October 2020, nearly 30 million Indonesians own cryptocurrency[i]. Indonesia is also amongst the top countries in terms of the increase in the use of Bitcoin. Several startups from within and outside the country have emerged and tried their luck in developing businesses in this field. This article will explain the legal status of cryptocurrency Indonesia and what you should know about it.
The Definition of Crypto-Assets
The Indonesian Commodity Futures Trading Regulatory Agency (CoFTRA or ‘Bappebti’) regulated crypto-assets in 2019, making it legal to trade crypto-assets in Indonesia[ii]. The regulation defines crypto-assets as intangible commodities in the form of digital assets using cryptography, peer-to-peer networks, and distributed ledgers, to regulate the creation of new units, verify transactions and secure transactions without interference from other companies. Note that Bappebti uses the term ‘crypto-asset’ to reference cryptocurrency as it is only recognised as a commodity — it can be bought and sold in cash or via derivatives such as futures, rather than a legal tender.
This also means that crypto-assets are not considered a valid and legal means of payment and there is no legal transaction or document that can be done using cryptocurrency such as bitcoin as collateral simply because the current Indonesian currency law does not allow it[iii]. The Central Bank of Indonesia had to issue a press release in 2018, asserting that virtual currencies, including bitcoin, are not recognised as legal tender, and it is strongly prohibited to use them as a means of payment in Indonesia. This resulted in many e-commerce platforms and shops revoking Bitcoin as a payment method from their websites. The statement also firmly prohibits financial services institutions to be engaged in cryptocurrency activities.
This leads to confusion for many people as to whether crypto-assets have legal status in Indonesia. Again, it is legally permitted to trade crypto-asset in Indonesia because it is treated the same as other commodities, e.g. gold, rubber, coffee, etc., but it cannot in any way be utilised as a means of transactions.
Key Parties of Crypto-Asset Trading
The Bappebti regulation lists the key parties involved in crypto-asset trading as follows:
- Crypto-Asset Exchange (Pasar Fisik Aset Kripto) – a physical market of Crypto-Assets carried out using electronic facilities provided by Futures Exchange or electronic media owned by Crypto-asset Traders to buy and sell crypto-assets.
- Crypto-Asset Physical Trader (Pedagang Fisik Aset Kripto) – the party that has obtained approval from Bappebti to carry out crypto-asset transactions either on their own behalf, or facilitate the transactions with Crypto-Asset Customers.
- Crypto-Asset Customer (Pelanggan Aset Kripto) – the party that utilises the service provided by the Physical Trader to conduct crypto-asset transactions on Crypto-Asset Exchange.
- Crypto-Asset Clearing Agency (Lembaga Kliring Berjangka Aset Kripto) – an entity that organises and provides systems to oversee the settlement of crypto-asset transactions.
- Crypto-Asset Storage Provider (Pengelola Tempat Penyimpanan Aset Kripto) – a party that has obtained approval from Bappebti to manage the crypto-asset storage.
Requirements of Investing in Cryptocurrency Indonesia
To this date, there is no futures exchange for crypto-assets in Indonesia yet so the Bappebti registration is currently closed. However, it is clearly regulated that crypto-asset trading is 100% open to foreign investors. In order to become a Bappebti certified Crypto-Asset Physical Trader, an investor must satisfy the following requirements[iv]:
- have a minimum paid-up capital of IDR 50 billion;
- maintain equity of at least IDR 40 billion;
- have obtained the PSE certificate (Electronic System Provider or Penyelenggara Sistem Elektronik) for their system from the Ministry of Communication and IT;
- have a company business plan and financial projection for the next 24 months;
- meet the system requirements from Bappebti.
Requirements for prospective Crypto-Asset Clearing Agencies:
- have a minimum paid-up capital of IDR 500 billion;
- maintain equity of at least IDR 400 billion.
Requirements for prospective Crypto-Asset Storage Providers:
- have a minimum paid-up capital of IDR 50 billion;
- maintain equity of at least IDR 40 billion.
Bappebti has also regulated the criteria for the crypto-assets that can be traded in Indonesia. The crypto-assets must meet the following eligibility requirements from Bappebti:
- employ distributed ledger technology;
- be asset-backed or utility-based;
- in the case of a utility-based crypto-asset, the crypto-asset must be in the top 500 in terms of market capitalisation (Coinmarketcap);
- be traded on the largest crypto-asset exchange in the world;
- offer economic benefit such as taxation, growing the informatics industry and competency of experts in the field of informatics;
- have successfully passed a risk assessment, including the risk of money laundering and terrorism financing and the proliferation of weapons of mass destruction.
At the time of writing, Bappebti has already listed 13 companies that are eligible for crypto-asset trading and certified them as potential Crypto-Asset Physical Traders[v].
Closing Thoughts: Cryptocurrency Indonesia
It is completely legal to trade crypto-assets and foreign investors are welcome to do crypto-asset trading business in Indonesia. If you need assistance in incorporating a company in Indonesia, do not hesitate to reach out to us at anita@permitindo.com or contact us by filling this form.
References
[i] Hampir 30 Juta Warga Indonesia Punya Cryptocurrency (Sindonews) [Link]
[ii] Bappebti Regulation No 5/2019
[iii] Currency Law (UU Mata Uang) No 7/2011
[iv] Bappebti Regulation No 2/2020
[v] Bappebti Bakal Kenakan Sanksi Penyedia Jasa Kripto Ilegal (CNN Indonesia) [Link]
Other References:
Bappebti Regulation No 9/2019
Government Regulation No 49/2014
Ministry of Trade Regulation (Permendag) No 99/2018
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