Asosiasi Blockchain Indonesia: Crypto Asset Market in Indonesia Weakens. What is the solution?

PRNewswire October 27, 2022

JAKARTA, Indonesia, Oct. 27, 2022 /PRNewswire/ — The crypto asset industry in Indonesia is still the center of attention for many parties because of its development. Compiled from Commodity Futures Trading Regulatory Agency’s (CoFTRA) latest data as of August 2022, crypto asset investors have penetrated 16.1 million customers, but on the other hand, the crypto asset industry is also experiencing a significant decline where the total transaction value in the period January to August 2022 was recorded at IDR 249.3 trillion, down by 56.35% compared to the same period in 2021.

The decline in the value of crypto asset transactions since the beginning of 2022 is the impact of global economic conditions because the macroeconomic position was not good throughout the year due to the recession and challenges that caused the crypto asset industry to experience a bear market. According to the Founder & CEO of Bitocto, Milken Jonathan, the increase in interest rates from the Fed (the central bank of the United States) will certainly continue to absorb liquidity from various assets and will continue to have an impact until pivoting occurs from the Fed. But on a micro level, one of the reasons is the tax rate in Indonesia, where trading fees on global exchangers tend to be cheaper and some are even free for certain pairs. “With the tax rate, it is certainly difficult for local exchangers to compete and can cause capital outflows because of the tendency to trade on foreign exchangers. For that, the government can consider relaxing some rules first, given the macro situation that has such an impact,” said Milken. In addition, Honorary Member A-B-I as well as Telkom University Lecturer Dr. Andry Alamsyah, S.Si, M.Sc also added, according to Andry “bear market conditions are repeated conditions and have occurred in the past. For the crypto industry, it’s good that during bear market conditions, existing projects can focus on fundamental functions so that if conditions recover, the products/services offered by the project are more legit and mature. The blessing in disguise of this bear market condition can be utilized by crypto asset developers to be able to conduct deeper research to produce product outputs with better fundamentals.”

Chairwoman of the Indonesian Blockchain Association (A-B-I), Asih Karnengsih said that bear market conditions require us to focus on activities that can strengthen the industrial ecosystem nationally because Indonesia still has great potential. So it is hoped that all stakeholders, both from the Government, Business Actors, and all stakeholders can “continue to collaborate to protect the crypto asset industry by improving/evaluating existing policies, such as the coin or token valuation system that is included in CoFTRA’s Positive List until the immediate inauguration of the Crypto Asset Exchange”.

However, during several unresolved issues, the Ministry of Trade through CoFTRA issued Circular (SE) No. 208/BAPPEBTI/SE/08/2022 concerning the Termination of Issuance of Registration Permits for Candidates for Physical Crypto Asset Traders (CPFAK) which is suspected of legally violating norms and causing losses to CPFAK, both those who are currently and those who will carry out the registration process. If people look at other technology-based financial industries, such as Electronic Money Operations under the supervision of Bank Indonesia and Online Loans under the supervision of OJK, a moratorium on the registration process has also been carried out. If people can use this as a reference, the development of technology and markets is indeed one step ahead of the law/regulations. On the one hand, a moratorium of the licensing process can indeed be considered to harmonize the implementation rules with current market conditions that are completely uncertain to protect consumers and business actors in Indonesia.

Furthermore, several companies are in the registration process that has complied with the provisions in CoFTRA Regulation No. 8 of 2021 such as capital fulfillment, business plan development, application development, compliance with security certification standards, and others which of course cause material losses for business actors. This is certainly contrary to the spirit of the government to widen investment opportunities and create new jobs in Indonesia.

Meanwhile, the Director General of Taxes at the Ministry of Finance, Suryo Utomo, said, “Taxation on crypto assets PPh 22 is the same, starting in June. It means that in the third month of June, July, and August we get IDR 125 billion. PPh 22 is IDR 60 billion, this is the rate 0, 5% later for the VAT IDR 65 billion,” said Suryo at the DGT Head Office, South Jakarta, Tuesday (4/10/2022). This total includes income from PPh 22 on crypto asset transactions through Trading Operators through Electronic Systems (PPMSE) and/or self-deposits. With the large contribution of crypto asset trading to state revenue, the government should immediately lift the moratorium or if it is needed to maintain the moratorium, it can still allow companies that have submitted a registration process before the issuance of the moratorium the right to continue the licensing process. This is certainly considered to provide a sense of justice for parties who have good intentions following the provisions of Perba 8/2021.

In addition, the inauguration of the Crypto Asset Exchange is still yet to become another issue that is quite crucial in the regulatory and supervisory process carried out under the Ministry of Trade. Even though the establishment of the Crypto Asset Exchange is an urgency considering that the Exchange functions as a forum to oversee the trading of crypto assets in Indonesia, which was originally targeted to be inaugurated by the end of 2021. Currently, there are candidates for the Crypto Asset Exchange who have registered with CoFTRA and have met the substantive requirements following Perba 8/2021, namely PT Digital Futures Exchange (DFX). DFX Director Oham Dunggio, said “in terms of readiness, for substantive and technical reporting requirements we are 100% ready to operate. Furthermore, DFX is waiting for permission from CoFTRA to be allowed to fully support the growing crypto asset industry in Indonesia.”

Meanwhile, from the business side, Robby as the CCO of Reku, said, “Crypto Asset Exchange for the crypto industry is currently a major problem for CPFAK. Considering the status as a crypto asset trader will never be perfect because the industrial ecosystem is not yet ideal. After all, supporting institutions such as the Crypto Asset Exchange have not yet been formed.”

Seeing the condition of the crypto asset industry in Indonesia, which is as deep as a bear market condition, recovery efforts are needed to maintain the stability of the crypto asset trading ecosystem in Indonesia. A-B-I and the entire ecosystem hope that the government will immediately plan various decisive actions and swift actions against various issues that exist in the crypto asset industry.

SOURCE Asosiasi Blockchain Indonesia

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