Indonesia is planning to establish a cryptocurrency exchange and transfer regulatory powers over these assets to the Financial Services Authority (FSA).
Currently, crypto assets in Indonesia are traded alongside commodity contracts under the supervision of the Commodity Futures Trading Regulatory Agency (BAPPEBTI). However, as part of a broader financial sector reform, the FSA will assume regulatory control over crypto assets within the next two years, at which point the exchange is expected to be up and running.
Indonesia’s central bank has released a white paper outlining its plans for a digital currency, and a recently passed law recognizes cryptocurrency and digital assets as regulated financial securities.
Despite a decrease in market activity last year, there has been a surge in new investors entering the crypto market. In the first 11 months of 2022, the number of crypto investors in Indonesia rose to 16 million, up from 11.2 million at the end of 2021.
However, trading values shrank to approximately 300 trillion rupiah (US$22 billion) during this period, a significant decrease from the 859 trillion rupiah seen in the previous year.
There are currently 383 crypto assets and 10 local coins that can be traded in Indonesia, according to BAPPEBTI.
While Indonesians are allowed to trade crypto assets as a commodity, they are not permitted to use them as a form of payment.
Tax on crypto assets
The government also plans to impose value-added tax (VAT) on crypto assets, as they are considered a commodity under the jurisdiction of the trade ministry.
However, the VAT rate on crypto assets will be lower than the 11% applied to most Indonesian goods and services. In addition, the government will impose an income tax on capital gains from crypto investments at a rate of 0.1% of the gross transaction value, the same rate applied to shares. The implementation of these taxes is still being finalized.
The total crypto asset transactions in commodity futures markets reached US$59.8 billion last year, a more than tenfold increase from the previous year, according to BAPPEBTI.
Growing number of crypto firms
In a bid to diversify its services, Indonesia’s largest tech company, GoTo Gojek Tokopedia (GoTo), entered the cryptocurrency market last year by acquiring a local crypto exchange, Kripto Maksima Koin.
GoTo purchased 100% of the shares in the exchange for 124.84 billion rupiah (US$9.3 million) with the goal of becoming “a diverse money management hub.”
Kripto Maksima Koin is one of 25 crypto exchanges that have been granted licenses by BAPPEBTI.
Global crypto firm Binance now owns almost 100 per cent of PT Crypto Indonesia Berkat, known as Tokocrypto, lifting its shareholding from more than 51% after two years.
Another Indonesian crypto exchange, Reku, has also recently raised US$11 million in a Series A round led by AC Ventures, with participation from Coinbase Ventures and Skystar Capital.
Reku stated that the crypto market has been surging in Indonesia in recent years and will continue to thrive in the future.
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