Indonesian Crypto Exchanges Must Register With New Bourse or Face Shutdown

The bourse – called the Commodity Future Exchange (CFX) – is designed to operate similarly to traditional stock exchanges like NASDAQ but with a specific focus on digital assets.

The CFX is the Indonesian government’s response to the high local demand for crypto. In Indonesia, there are more than 18 million registered crypto traders compared to around 12 million stock traders, according to official data from 2023.

All ‘legal’ crypto exchanges operating in Indonesia since 2014 are lumped into one category called “prospective crypto exchanges” because the authorization regime came later. Firms have to go through stringent checks to win recognition as legitimate enterprises linked to the CFX.

The authorization process involves registration with self-regulatory organizations (SRO) like the CFX and later a test by Bappebti to determine a company’s fitness to operate.

A crypto exchange license (PFAK) is only issued if all requirements are met, Robby Bun, chairman of the country’s crypto asset trade association, Aspakrindo, told CoinDesk Indonesia. Aspakrindo acts as a mediator between prospective crypto exchanges in the industry and regulators.

Without completing the new procedures and registrations, prospective crypto exchanges cannot operate in Indonesia.

“There is a deadline for prospective crypto exchanges. If they do not register by the specified time, they will automatically [be unable to] operate in Indonesia,” Robby said, adding that the deadline is Aug. 17, 2024. If they want to continue operating, crypto exchanges must also obtain licenses, Robby said.

In Indonesia, there are 29 prospective crypto exchanges that will require authorization, Subani, chairman of CFX, said in an interview with CoinDesk Indonesia.

“All transactions within these prospective crypto exchanges are diligently reported and monitored. Our primary objective is to ensure a smooth transition from being a prospective crypto exchange to becoming a fully recognized crypto exchange,” Subani said.

Registration with the CFX essentially serves as a gateway for the government to monitor cryptocurrency transactions for tax purposes.

It could be followed by some form of custodian for asset storage and liquidity monitoring, as well as a clearing house for recording transactions for tax compliance, according to the 2019 Bappebti regulations. But those could be a while away.

“Regarding clearing and custodian, there are still challenges in the implementation mechanism,” said Robby.

Although it’s unclear what role the bourse will play when this change comes about, it could mean good news for crypto traders. As commodities, crypto has been subject to Value Added Tax (VAT) and Income Tax (PPh) since May. But if crypto assets are considered securities, taxes might be reduced, according to Robby.

“There’s a chance we could remove VAT and lower income tax rates to be less burdensome for crypto exchanges to pay taxes,” Robby said during a Dec. 13 CoinDesk Indonesia Telegram podcast. “This is to ensure that Indonesia can compete globally.”