The island nation of Indonesia, being the fourth largest nation in the world in terms of population was poised for Bitcoin adoption. Being a largely cash-based and offline economy, along with the absence of a national credit lending system and the increasing use of smartphones makes Indonesia one of the prime nations for the mass adoption of cryptocurrencies and blockchain technology.
January 2018 – Banning the trading of, as well as use of Cryptocurrencies as payments
However, just over a year ago, Indonesia had taken a strong stance against cryptocurrencies. The central bank of Indonesia, in January 2018, had issued a press release urging the public not to buy and sell Bitcoin and other virtual currencies. The country even started cracking down on coffee shops that were accepting Bitcoin as a form of payment, at the time.
June 2018 – Trading of Cryptocurrencies as a commodity, permitted
Six months later in June 2018, however, Bappebti or the Indonesian Futures Exchange Supervisory Board made the move to permit the trading of cryptocurrencies as a commodity on the nation’s futures exchange. Exchanges, wallets and miners were to fall under the purview of regulatory authorities, with the government slated to adopt additional regulations governing the operation of crypto exchanges in the country.
The Commodity Futures Exchange Supervisory Board (Bappebti) made an announcement on Monday, stating that cryptocurrency futures exchanges must be registered and approved before operating – a follow up to the decision that was first ruled in June 2018. The agency, which is under Indonesia’s Ministry of Trade, also confirmed that crypto assets are officially recognized as commodities that can be traded on the country’s futures exchange.
Regulations on Futures Exchanges, Clearing Houses, Futures Traders and Storage Service Providers
The head of Bappebti, Wisnu Wardhana, stated that regulations have been set to provide legal certainty to the crypto futures sector, as well as to protect consumers and investors. All the rules and registration requirements have been detailed in a document, where futures exchanges and clearing houses that deal in crypto assets are required to have a minimum paid-up capital of 1.5 trillion Indonesian rupiahs ($106 million) along with maintaining a closing capital of balance of at least 1.2 trillion Indonesian rupiahs ($85 million).
These entities are required to have ‘a good level of system security’ and a minimum of three employees who are Certified Information System Security Professionals (CISSP). They are required to undergo a risk assessment process including the confirmation of anti-money laundering (AML) and combating the financing of terrorism (CFT) compliance.
With regards to futures traders and storage service providers of crypto assets, Bappebti set out rules stating that both must also be approved before operating. Additionally, both entities must maintain a minimum paid-up capital of 1 trillion Indonesian rupiahs ($71 million) and minimum closing balance of 800 billion Indonesian rupiahs ($57 million).
The new rules do not apply to Initial Coin Offerings (ICOs), as clarified by the agency.
However, the use of cryptocurrencies as a means of payment is still banned in the country.