• Rahmat Adrian

Development of Cryptocurrency in Indonesia

Updated: Aug 31

By: Rahmat Adrian (rahmat.adrian@launcher.id) and Rahel Manurung

Development of Cryptocurrency in Indonesia

The first globally renowned cryptocurrency was established in the form of bitcoin by a programmer under the pseudonym of Satoshi Nakamoto in 2009. Cryptocurrency uses the technology called blockchain to enable its existence. Blockchain technology is a decentralized ledger of all transactions across a peer-to-peer network that enables participants to confirm transactions without any trusted third party. Ever since that year, the popularity of cryptocurrency has been increasing in many countries, including in Indonesia.

During this unprecedented time when a pandemic hit hard the global economy, cryptocurrency paves its way to surge. A nation-wide news media stated that amidst the pandemic, bitcoin price surges up to Rp170.7 million or around US$11 thousand from initially staying at Rp130 million. The CEO of one of Indonesia’s largest crypto asset marketplaces stated that there are several things which are believed to be the reason behind this surge, one of it was because recently the government of the United States has allowed banks to use cryptocurrency. The current high price of bitcoin is a sign that cryptocurrency will enter a bullish trend, which means that the price will get higher and higher from this point. Hence, it is believed that it will be very beneficial to keep or to start trading crypto assets.

From a legal standpoint, cryptocurrency has a different legal status in each country. For example, Japan legalized cryptocurrency as a type of money while in the Philippines it is legalized as a remittance. How the Government of Indonesia regulates the cryptocurrency? This article will further discuss the current legal status of cryptocurrency in Indonesia.

The Legal status of Cryptocurrency in Indonesia

For many years, there was an absence of regulation regarding the legal status of cryptocurrency in Indonesia. But finally, in 2018 the government issued the Minister of Trade Regulation No. 99 of 2018 on General Policy on the Implementation of Crypto Assets Futures Trading. This regulation legalized cryptocurrency as a commodity that can be subject to futures contract trading, called as crypto assets. Then in 2019, the Commodity Futures Trading Supervisory Authority (“Bappebti”) issued Bappebti Regulation No. 5 of 2019 on Technical Provisions Governing Physical Futures Trading of Crypto Assets as last amended by Bappebti Regulation. No. 3 of 2020 which provides a detailed regulatory framework for the operation of the physical crypto-asset future market. Under this regulation, a crypto asset may only be traded if it fulfils the following requirements:

  1. employs distributed ledger technology;

  2. is asset-backed or utility-based;

  3. in the case of a utility-based crypto asset, the crypto asset must be among the top 500 in terms of market capitalization;

  4. it must be traded on the largest crypto asset exchange in the world;

  5. offers economic benefit; and

  6. has successfully passed a risk assessment, including anti-money laundering and combating the financing of terrorism and proliferation of weapons of mass destruction regulations.

Moreover, this regulation also states that crypto asset may only be traded if it is approved by the head of Bappebti in Bappebti’s Schedule of Crypto Assets.

LID Advisory is a publication prepared by Launcher.id. It is intended to inform in general topics covered only, and should not be treated as a legal advice or relied upon when making business activities or investment decisions. Should you have any inquiries on the matters contained in LID Advisory, or other comments generally, please contact us at contact@launcher.id.