Indonesia Crypto Law And Regulations {Updated 2023}

Based on Indonesia Crypto Regulations crypto is recognized as a trading asset or commodity. The concept of crypto being used as an official currency for transactions is not permitted yet. 

WHAT IS THE LEGAL STATUS OF CRYPTOCURRENCY IN INDONESIA?

According to The Ministry of Trade Regulation, cryptocurrency business regulations state that trading is legal in Indonesia. Proceeding with this authorization, the Indonesian Commodity Futures Trading Supervisory Authority (BAPPEBTI) published Regulation No. 5 of 2019. 

This Regulation No. 5 grants guidelines and regulations for handling cryptocurrency and its future in the Indonesian Market. Financial institutions are not permitted to sell and support the sale of crypto assets, according to Indonesia’s Financial Services Authority (OJK).

The nation has recognized participation interest from two dozen companies out of 383 licensed crypto exchanges. It is in direct communication with a chosen few people who will appear on the exchange once it is finished. The Indonesian Blockchain Association (Assosiasi Blockchain Indonesia) is in charge of the majority of the nation’s crypto regulation, even down to the examination of people on a whitelist before any token offering.

Indonesia’s cryptocurrency exchange trading, also known as bourse, will become the first in Asia as a result of China’s withdrawal from the region’s market, surpassing Hong Kong in the race to draw in investment and stimulate the economy.

CRYPTOCURRENCY LAWS IN INDONESIA

Indonesia forbids the use of cryptocurrencies as money but permits the trading of them as commodities. 229 crypto assets have received approval from Indonesia’s Commodity Futures Trading Regulatory Agency (Badan Pengawas Perdagangan Berjangka Komoditi, or “BAPPEBTI”) to be traded there.

According to the nation, “Cryptocurrencies must abide by risk assessment, anti-money laundering (AML), and countering the financing of terrorism (CFT) requirements. Additionally, the rule requires that bitcoin traders maintain transaction history for at least five years and maintain a server inside the nation. 

Cryptocurrencies are not subject to the same rules as financial securities because of this.  Due to existing restrictions, cryptocurrency can only be traded on an Indonesian futures exchange as commodities.

WHAT ARE THE REQUIREMENTS TO SET UP A CRYPTOCURRENCY BUSINESS IN INDONESIA?

A foreign investor who wishes to set up a business company for cryptocurrency business must become a certified Crypto-Asset Physical Trader. To be a BAPPEBTI-certified Crypto-Asset Physical Trader, one must fulfill the qualifying requirement below:

• Possess a paid-up capital of no less than IDR 50 billion.
• Maintain equity worth no less than IDR 40 billion.
• Obtain a PSE accreditation from the Ministry of Communication and IT (Electronic System Provider or Penyelenggara Sistem Elektronik).
• Have a business plan and financial predictions for the upcoming 24 months.
• The prerequisites system set out by Bappebti must be followed.

 Notably, cryptocurrencies must adhere to the nation’s regulations for risk assessment, anti-money laundering, and countering the financing of terrorism (CFT). Additionally, the rule requires that Bitcoin dealers must:

•  Maintain the transaction history for at least five (5) years 
• Maintain a server inside the nation.
• Cryptocurrencies may only be traded on an Indonesian futures exchange as commodities but not as payment instruments.

WHAT ARE THE CRYPTOCURRENCIES BUSINESS ACTIVITIES THAT YOU CAN DO IN INDONESIA?

Upon receiving the license to trade a crypto asset by the BAPPEBTI, you can facilitate crypto business activities such as:

• The opening of cryptocurrency exchange platforms, the creation of digital wallets, and other operations related to the cryptocurrency business will be permitted for those who intend to operate in Indonesia.
• The Futures Exchange Supervisory Board is in charge of monitoring the operations of cryptocurrency companies in Indonesia and making sure they abide by all applicable regulations.
• Purchasing and selling digital assets with Indonesian Rupiah
• Trade among one or more categories of cryptocurrencies
• Storing your cryptocurrency as a possession or long-term investment

Importantly, all cryptocurrency transactions must be made on a recognized exchange and reported to BAPPEBTI at the end of each month.

SHIFTING OF AUTHORITY FOR CRYPTO ASSET IN INDONESIA

With the approval of the Law on Development and Strengthening of the Financial Sector by the House of Parliament and the Indonesian Government, the market for crypto assets will also soon undergo a change. The law is intended to update a number of current financial sector regulations, including the regulation of crypto assets.

The CFTRA will no longer be used to monitor and oversee crypto assets under the new law. The OJK will take over the position instead. The Chief Executive Superintendent of Financial Sector Technology Innovation, Digital Financial Assets, and Crypto Assets are required to establish a Board of Commissioners under this new law. Such a post would be in charge of regulating activities involving digital currency in Indonesia.

The full transfer of regulatory and oversight responsibilities from the CFTRA to OJK must be finished within 24 months and be governed by a government regulation that must be issued no later than 6 months following the promulgation of this new law.

INTRODUCTION TO DIGITAL RUPIAH IN INDONESIA

In addition, Bank Indonesia is the newest player in the cryptocurrency space. The Indonesian monetary authority will issue its own CBDC (also known as Digital Rupiah) as part of its endeavor to create its own digital currency (also known as Central Bank Digital Currency or CBDC). Many people anticipate that the Digital Rupiah will have an impact on the cryptocurrency market, even if it is still in its early stages. 

This is especially true given that, because of its centralization, it is anticipated to have fewer unpredictable price fluctuations and better legal protection. All of the aforementioned improvements, particularly the new laws, are likely to make Indonesia’s crypto-asset market more competitive and offer the general public clarity.

Please note that the regulations regarding cryptocurrencies in Indonesia are rapidly evolving and subject to change. The information provided here may not be up-to-date or comprehensive. It is recommended to consult with a legal or financial professional such as Relin Consultants for the latest guidance on crypto regulations in Indonesia before setting up an Indonesia Company.