Hey Coincubs! 2023 is going to be a wild ride. Just make sure you buckle up because most countries are steaming ahead with cryptocurrency regulation. Following the crash of FTX, Terraform Labs, and Celsius last year, jittery governments are belatedly jumping into action to create effective regulations that are crucial for the mainstream adoption of […]
How can I trade Bitcoin and cryptocurrency in Indonesia?
The booming crypto economy of Indonesia
Indonesia has seen considerable take-up of crypto trading amongst its population of 273 million with widespread blockchain advocacy across numerous business sectors and thriving Blockchain educational opportunities within many of the country’s leading Universities.
The huge enthusiasm for Bitcoin and cryptocurrencies among the population has led to the Government taking actions that seem to have followed demand. As a result, regulation has been light, but the Government has seen the opportunities for growth and the need for clearer and simpler regulation.
In tandem with the country’s Central Bank, the government is wholeheartedly pursuing the investigation of digital currencies per se, especially the pros and cons of a Central Bank Digital Currency. CBDC, It is thought that the country, like many others in South East Asia, is actively looking to implement its own CBDC for use within its banking system in the very near future.
CBDCs and digital currency
Indonesia has a broadly positive crypto outlook with enthusiastic plans for developing regulated forms of state-backed digital currency as well as ‘local’ crypto tokens for internal use – and potentially for international acceptance.
Locally issued crypto tokens which become internationally accepted seem a long way off but they live in hope. However, it is estimated that the number of people who have held or traded crypto in some form or other, far outweighs those who hold or trade traditional stocks and shares and, despite market conditions, the appetite for crypto appears to be strong.
Once again, as we see in other countries with large populations, many of them poor, crypto’s appeal is largely due to the fact that it requires no bank account to use them.
Crypto regulation in Indonesia
Cryptocurrencies are regulated by the country’s Commodity Futures Trading Regulatory Agency BAPPEBTI, under the Ministry of Trade and it works in association with the Blockchain Association of Indonesia ABI, a trade group. The joint aim is to assess and maintain regulatory rules for Virtual Asset Service Providers (VASPS)
The organization has the responsibility for declaring which of the massive number of global digital currencies now available are formally accepted by the country – and only these can be traded. The number, however, is high and runs into the hundreds.
Nb – Forthcoming plans by Indonesia’s Trade Ministry will include a new rule that requires indigenous crypto-asset exchanges to have at least two-thirds of its directors and commissioners being Indonesian citizens and reside in the country. The quite logical reason for this is that they can’t run away if the exchange hits the buffers!
At the back of Indonesia’s quite progressive regulation and optimistic outlook seems to be the ambition to boost the country’s economy – and also to increase the tax take (there’s a surprise). As such, much promotion of the country as a great place for crypto investors is ongoing.
The promotion of ‘local crypto tokens’ is one thing, but obtaining a licence for them is rigorous – and only licenced tokens can be traded on the country’s regulated exchanges. For anyone that’s interested, the process for obtaining a licence is called the “analytical hierarchy process” (AHP), which is conducted by the ABI and BABEPPTI.
As such established cryptocurrencies are more readily traded on licenced exchanges such as Indodax, which is one of the country’s largest crypto exchanges with more than 5.5 million users.
Crypto Facilitation - Banks3
Crypto Services - VASPS2
Crypto Pensions / Investment Industry0
Business Community and Enterprise Funding3
Blockchain and crypto education
The appetite for investors in Indonesia is still extremely positive – and tax is low. As a result, the blockchain and crypto community is buoyant. All of Indonesia’s leading Universities offer blockchain and crypto educational courses.
Below is the list of best universities in Indonesia ranked based on their research performance in Blockchain and Cryptography.
Bandung Institute of Technology University of Indonesia Telkom University Gunadarma University
Taxes in Indonesia
Taxation and trading
Taxation is light, and only this year, the Government’s Finance Ministry imposed a flat 0.1% tax on crypto-assets purchases. Earnings and capital gains have been subject to a standard 0.1% final income tax since the summer of 2022.
Crypto assets are subject to VAT having been defined as a commodity rather than a currency and the 0.1% capital gains tax payable is equivalent to the rate Indonesian investors are charged on shares. However, it is worth remembering that this flat VAT rate on crypto assets is still way below the 11% levied on most Indonesian goods and services.
Crypto trading in Indonesia is regulated by the Commodity Futures Trading Regulatory Agency and it is estimated that as many as 7.4 million Indonesians had invested in or held some crypto by mid-2022, despite, or because of, the fall in crypto prices. Indonesians have already traded 212 trillion rupiahs ($14.3 billion) worth of crypto in the first half of 2022* *Source: CoinDesk
The use of Crypto/Bitcoin for payments is forbidden, probably because of religious beliefs as well as regulations. But this doesn’t seem to have curbed the enthusiasm for speculative trading online – Indonesians are keen traders. So although crypto trading appears to be rampant – Indonesians are allowed to trade crypto assets as a commodity but not use them as a means of payment.
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