Are the new regulations a bane or a boon?
On February 18, the Indonesian Commodity Futures Trading Regulatory Agency (Bappebti) announced the passing of four new regulations to which cryptocurrency exchanges must adhere before they can operate within the country.
To conduct business in Indonesia, exchanges trading in crypto futures must first register and obtain approval from Bappebti, which has implemented stiff regulations.
Before gaining approval, digital currency exchanges must have at least 1.5 trillion Indonesian rupiahs ($106 million) in paid-up capital (the amount of start-up money from investors) and maintain at least 1.2 trillion Indonesian rupiahs ($85 million) at the end of their accounting cycle.
Physical traders will be required to maintain a paid-up capital of one hundred billion rupiah ($7,044,000) and maintain a capital end balance of at least eighty billion rupiah ($5,635,200).
Indrasari Wisnu Wardhan, head of Bappebti, praised the new regulations:
“The issuance of these regulations shows that the Government continues to keep abreast of the dynamic Commodity Futures Trading (PBK) industry and always strives to provide space for the development of digital commodity innovation businesses. [Bappebti] is committed to providing legal certainty and protection for the community, as well as certainty of business in the sector.”
Reuters reports, however, that not everyone is happy with the new rules. Oscar Darmawan, chief executive of major digital asset trader Indodax, asserts that this minimum capital restriction is more than is required to open a rural bank and “much higher than the 2.5 billion rupiah minimum paid-up capital for a futures broker of other commodities.” While Darmawan agrees that regulation is needed to protect investors and help the economy, he believes it “should not kill an industry.”
In addition to regulations about capital holdings, exchanges in Indonesia will be required to employ at least three Certified Information System Security Professionals (CISSP) and must undergo a risk assessment to prove the exchange is in compliance with anti-money laundering and counter-terrorism funding regulations.
Indonesia’s relationship with cryptocurrency has been shaky. In October 2017, Agus Martowardojo, governor of the Bank of Indonesia, declared that cryptocurrency could not be used as a form of payment within the country. However, in January 2018, the bank experimented with issuing a state-issued cryptocurrency.