Indonesia to Introduce New Legislation to Regulate Crypto Exchanges

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Officials of the Minister of Trade and the Commodity Futures Trading Regulatory Agency (Bappebti) in Indonesia recently noted at a parliamentary hearing in Jakarta that they plan on tightening crypto exchange regulation in the country.

According to Didid Noordiatmoko, the acting head of Bappebti, one of the requirements of the new rule would be for two-thirds of all directors of crypto exchanges to be Indonesian citizens residing in the country. The executive noted that this is done to prevent top management from fleeing the country if something goes wrong.

The new rules come shortly after financial troubles arose in Southeast Asia-focused crypto exchange Zipmex, which has halted withdrawals until further notice.

Furthermore, the new rule will mandate crypto exchanges to use third-party custodians to store investors’ funds. Exchanges will also be prohibited from re-investing said funds into other businesses.

Commenting at the parliamentary hearing, Jerry Sambuaga, the Deputy Minister of Trade, noted:

“We don’t want to give permits (to exchanges) carelessly, so only for those that meet the requirements and are credible.”

While he refrained from giving any specific launch date, he noted that Bappebti will roll out the new regulation soon. The government official also confirmed that the government still has plans to launch a crypto asset bourse this year. The launch of this apparatus has been postponed multiple times already.

Indonesia Government Does not Recognize Crypto Use as Payment Solution

While the Indonesian government allows for the trading of crypto assets, it does not recognize the asset as a payment instrument. Earlier this year, the Indonesian Directorate General of Taxes announced that it had set both income tax (PPh) on capital gains from all crypto investments and value-added tax (VAT) on crypto purchases.

In 2021, Indonesia’s total crypto transactions spiked by 1,224% from the previous year to 859.4 trillion rupiahs ($57.5 billion), according to Bappebti. In the first six months of 2022 alone, it had recorded 212 trillion rupiahs worth of crypto transactions and had 15.1 million crypto users.