Indonesia - Crypto penetration

Indonesia is one of the largest crypto markets in Southeast Asia, with a population of 273 million, and it already has crypto regulations. However, these regulations are not loyal to crypto investors and blockchain companies - they involve complex licensing systems and taxes on crypto transactions, as in India.

As for digital nomads and immigrants Indonesia may be good place to live several months. It's famous for the island Bali. However, there are few options to become permanent resident there. In most сases, foreigners need to do visa runs.

Indonesia has a minor danger security level according to our rating. Jurisdiction has 54.1 points (from 100) for safety level in Numbeo crime rating (1). The homicide level (2) is 0.6 per 100,000 inhabitants a year.

Using crypto as a currency for payments in Indonesia is forbidden(3) under local regulations, but crypto purchases and investments are allowed.

This ban also includes crypto salaries since crypto payments are forbidden in this country.

In 2019, the government has legalised cryptocurrency. The Indonesian Commodity Futures Trading Regulatory Agency (Bappebti) imposed rules to regulate crypto-assets as commodities and approved 229 crypto-assets for trading on futures exchanges. In 2021, Bappebti required that futures exchanges and brokers transacting in crypto obtain approval before conducting business. More information about Bappebti's regulation approach can be found here (4).

Abnrlaw (5) and Yahoo.Finance (6) did reviews of the Bappebti Crypto Regulation Act. You may see details under the toggle.

Details

To provide public certainty in crypto asset trading, the Commodity Futures Trade Supervisory Board/ Badan Pengawas Perdagangan Berjangka Komoditi ("Bappebti") has issued Regulation No. 8 of 2021 on Implementing Guideline of Physical Market Trading of Crypto Assets in the Futures Exchange ("Reg. 8/2021"). Reg. 8/2021 revokes the previous Bappebti regulations regarding Crypto Assets, which stipulated the amended guideline of crypto asset trading in the market.

Article 13 (2) Reg. 8/2021 stipulates that a crypto-asset physical trader who wants to be a facilitator in the crypto-asset market must obtain approval from Bappebti. This regulation also limits the scope of activities of a crypto asset physical trader to include as follows:

Sell and/or purchase of crypto assets between Crypto and Rupiah currencies;

Exchange one or more types of crypto assets;

Storage of crypto assets owned by the customer and

Transfer or relocate crypto assets between wallets.

Bappebti Regulation No. 8 of 2021, dated October 29, 2021, regarding Guidelines for Organizing a Crypto Asset Physical Trading Market on the Futures Exchange (“Bappebti Reg. 8/2021”) requires a company to obtain a Crypto Asset Physical Trader License in the form of a Crypto Asset Physical Trader Approval from Bappebti to engage in business as a Crypto Asset Physical Trader (also known as a Crypto Exchange). The licensing process under the regulation involves fulfilling capitalization, manpower, technical, and membership requirements at the Futures Exchange (Bursa Berjangka) and the Futures Clearing Agency (Lembaga Kliring Berjangka).

However, as the infrastructure for the Futures Exchange and Futures Clearing Agency is yet to be established, in their absence, Bappebti Reg. 8/2021 requires both existing and new Crypto Asset Physical Trader companies first to apply for registration to obtain a Crypto Asset Physical Trader Candidate License. Successful registration allows companies to do business before getting the Crypto Asset Physical Trader License.

Once the Futures Exchange and Futures Clearing Agency have been established, new Crypto Asset Physical Trader companies can apply directly for the physical trader license without registering as a Candidate. Companies that have already obtained a Crypto Asset Physical Trader Candidate License must reapply to the Head of Bappebti to become a Crypto Asset Physical Trader. This re-application process must be initiated by one month after establishing the Futures Exchange and Futures Clearing Agency as mandated under Bappebti Reg. 8/2021.

Based on Coindesk (7), in 2022, Bappebti announced a moratorium on issuing new crypto exchange licenses, possibly foreshadowing additional regulations in 2023. According to the new regulation framework, crypto regulation in Indonesia and the legal definition of VA will change. VA will be classified as securities and regulated not by the Trade Ministry but by the Financial Service Authority (OJK). A new Indonesian law that transfers crypto regulatory powers to the Financial Services Authority (OJK) from commodities watchdog CoFTRA indicates a shift in the country’s approach to policing the industry and acknowledging there’s more to it than asset trading.

Based on new legal acts, the regulatory power will shift (8) to the Financial Services Authority. Based on Cointelegraph (9), starting in December 2022, local FSA will regulate VASPs and crypto operations in the country, including the national crypto exchange launched in the summer of 2023.

Cointelegraph (10) has provided its assumption about new crypto regulations in Indonesia.

While these exchanges are currently facilitating all trades within the nation, the ministry’s exchange would act as a clearing house and custodian in the local crypto market.

There are five active crypto exchanges that are currently registered with the country’s regulators, and according to Zulkifli, the ministry’s crypto exchange could encompass all of them.

Currently, there are 32 companies in the Register of Bappebti (11). However, the regulation power in the country is in the state of transition from Bappetti to OJK by the end of 2024. These two regulators are mainly similar to the SEC (OJK) and CFTC (Bappebti) by their functions. In 2024 Binance’s partner, Tokocrypto, was fully approved to operate in the country.

Moreover, in 2024 the OJK has prepared a crypto sandbox regime for operating entities that will be implemented next year, called the Financial Sector Technological Innovation (“FSTI”) law. Already three companies were licensed in 2024 by this regime.

Tax name	Index
PIT tax Min	5
PIT tax Max	35
Corporate tax (CIT)	22
Min Individual CGT (for crypto)	22
Max Individual CGT (for crypto)	22
Wealth tax Min	0
Wealth tax Max	0
TDS tax	0.11

Indonesia has a special tax on crypto transactions, just like India. Based on Pintu (12) this tax is combined from 2 taxes VAT and PIT. Crypto buyers pay VAT during crypto transactions, and it has a 0,11% flat rate for registered crypto platform users or 0,22% for unregistered ones. Sellers pay income tax with 0,1% - 0,2%. According to Binamite (13), crypto-to-crypto transactions are also taxable. Moreover, taxpayers must declare their income from crypto operations and pay income tax.