23 Sep 2022

Indonesia to Tighten Cryptocurrency Regulation

Indonesia to Tighten

Indonesia is preparing to propose new rules to strengthen crypto exchange regulation. 

Under the revised regulatory framework, two-thirds of crypto exchange directors must be Indonesian residents residing in the country.

Officials from Indonesia's Minister of Trade and the Commodity Futures Trading Regulatory Agency (Bappebti) made an announcement on Tuesday (September 20). This happened in a parliamentary hearing in Jakarta. As per the announcement the government is preparing to release new rules to strengthen the regulation of cryptocurrency exchanges.

One of the new rules requires two-thirds of crypto exchange directors to be Indonesian residents residing in the country. 

Bappebti's acting head, Didid Noordiatmoko, told parliament: “That way, we can at least keep the top management from departing the nation if a problem emerges.”

The new regulation came in response to the financial difficulties experienced by Southeast Asia-focused crypto exchange Zipmex, which had to suspend withdrawals.

Crypto exchanges will also be forced to utilize a third party to store customer funds. They will also be barred from reinvesting stored crypto assets.

After the parliamentary session, Deputy Minister of Trade Jerry Sambuaga told reporters: "We don't want to provide permits (to exchanges) carelessly, but only for those who meet the conditions and are reputable."

He noted, without providing a particular timeline, that Bappebti will release the new regulations soon.

Sambuaga also affirmed that the Indonesian government is still planning to launch a crypto asset exchange this year. The launch of the bourse has been postponed multiple times.

Indonesia allows the trade of cryptocurrency assets as commodities but does not recognize cryptocurrency as a payment method. The Indonesian Directorate General of Taxes said in April that it has set both income tax on capital gains from cryptocurrency investments and VAT on crypto purchases at 0.1%.

According to Bappebti, crypto transactions in Indonesia surged 1,224% to 859.4 trillion rupiahs ($57.5 billion) in 2021 from 64.9 trillion rupiahs in 2020. In the first six months of this year, 15.1 million crypto users in Indonesia transacted cryptocurrency worth 212 trillion rupiahs.

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