The Indonesian government is keen to protect crypto investors from exploitative exchanges and ensure optimal tax collection.
The high demand for digital assets and Web3 products in Indonesia has seen registered users surpass more than 18 million, compared to 12 million traditional stock traders. With the number of crypto users expected to grow exponentially in the coming years, the Indonesian government has been preparing to tap into the blockchain and the nascent industry to grow its economy securely. In the latest move, the Indonesian government has announced that all cryptocurrency exchanges seeking to offer services in the country must register with the new bourse dubbed the Commodity Future Exchange (CFX). The CFX was launched earlier this year to enable the Indonesian government to keep track of all crypto transactions in the country for purposes of tax compliance.
However, the country remains committed to ensuring fair taxation for crypto firms in a bid to compete against global competition. According to Robby Bun, the current chairman of the Indonesian Crypto Asset Traders Association (ASPAKRINDO), crypto exchanges in the country must adhere to the new registration requirements to operate legally. Notably, the ASPAKRINDO was formed by crypto asset traders who have obtained registration and permits at the Commodity Futures Trading Supervisory Agency popularly known as Bappenti.
As of this report, 29 prospective cryptocurrency exchanges from Indonesia have a deadline of August 17, 2024, to register with the new rules. Consequently, CFX is thoroughly scrutinizing all transactions with the prospective crypto exchanges before handing them operating licenses.
Indonesia Crypto Regulatory Scope
The Indonesian government has remained alert in the past decade to ensure the safe adoption of digital assets. Indonesian President Joko Widodo has pursued the lawmakers to ensure clear crypto regulations in a bid to compete from a vantage point from its neighboring countries like Singapore which has attracted significant web3 investors. At the beginning of this year, President Widodo signed into law a policy that transfers crypto regulatory powers to the Financial Services Authority (OJK) from the Commodity Futures Trading Regulatory Agency (CoFTRA).
Notably, Indonesia registered 383 crypto assets through CoFTRA last year including Bitcoin (BTC), Ethereum (ETH), Binance Coin (BNB), and Litecoin (LTC), among others.
In the near future, crypto regulations in Indonesia could change and perceive digital assets as securities. Notably, a similar argument has been presented by the United States Securities and Exchange Commission (SEC).
Market Implication
Clear crypto regulations in Indonesia are expected to attract more investors in the near future as the industry grows exponentially. Moreover, confidence in the nascent crypto industry has gradually increased despite the notable implosion of related firms in the past two years. As of this report, Bitcoin price hovered around $43k with the total crypto market valuation at about $1.77 trillion.
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