Following the fast-paced crypto activities, the Commodity Futures Trade Supervisory Board (locally known as Badan Pengawas Perdagangan Berjangka Komoditi or “BAPPEBTI”) recently issued an update on crypto-asset through the issuance of BAPPEBTI Regulation No. 8 of 2021 on Guidance of Operation of Physical Market of Crypto-Asset in Future Exchange (“New Regulation”). This New Regulation was issued on 29 October 2021 and revokes the previous regulation, i.e., BAPPEBTI Regulation No. 5 of 2019 as lastly amended by BAPPEBTI Regulation No. 3 of 2020 on Technical Provision of Operation of Physical Market of Crypto-Asset in Future Exchange (“Old Regulation”).
Most of the major changes concern the rules governing the licensing requirements, rights, obligations, and duties of the key players involved in the crypto-asset physical market, such as Futures Exchange, Crypto-Asset Trader (“Trader”), Futures Clearing Institution, and Manager of Crypto-Asset Storage. In addition, the New Regulation also stipulates a more detailed regulatory framework on trading mechanism and governance compared to the Old Regulation.
Despite changes and new regulations in the New Regulation, similar to the Old Regulation, it still excludes initial coin offerings and/or initial token offerings from the scope of its regulatory scheme.
The following are the summary of the major changes:
Operation of Crypto-Assets Physical Market
The New Regulation reaffirmed the position of a Trader as the facilitator in the operation of the crypto-asset physical market. In the Old Regulation, the trading of crypto-asset in the physical market can also be carried out by using an electronic means owned by the Futures Exchange. The Old Regulation also stated that in this operation, the Futures Exchange can appoint a Trader to facilitate the transaction. This regulation is now changed in the New Regulation as the New Regulation now emphasizes that the trading in the crypto-asset physical market can only be carried out by using electronic means owned by the Trader. The New Regulation also clarified that the role of the Future Exchange in crypto-asset trading is to supervise the trading in the crypto-asset physical market.
Further, the New Regulation specifically set out the scope activities of the Trader, as follows:
- sell and/or purchase of crypto-asset and Rupiah currency;
- exchange between one or more types of crypto-asset;
- storage of crypto-asset owned by customers; and
- transfer of crypto-asset between wallets.
In the case where the Trader wishes to carry out any activities other than the above, it must first obtain approval from the BAPPEBTI.
Crypto-Assets Requirements
In general, crypto-assets can only be traded in the physical market if the crypto-assets are approved by and registered with the BAPPEBTI. The New Regulation amends one of the criteria of crypto-assets that can be traded in the crypto-asset physical market. Previously, one of the criteria of crypto-assets under the Old Regulation is having its market capitalization listed in the Top 500-coin market capitalization for Utility Crypto-Assets. This criterion is now replaced by getting assessed by the Analytical Hierarchy Process (AHP) method issued by the BAPPEBTI.
Licensing Requirements
The following is a summary of the comparison of licensing requirements of the key players involved in the crypto-asset physical market, as regulated in the Old Regulation and the New Regulation. In brief, the New Regulation seems to impose stricter requirements compared to the Old Regulation.
- Trader
| Old Regulation | New Regulation | |
| Minimum Issued and Paid-up Capital | IDR 50 billion | IDR 80 billion |
| Equity Maintenance | IDR 40 billion | IDR 64 billion |
| Other Requirements |
|
|
- Futures Exchange
| Old Regulation | New Regulation | |
| Minimum Issued and Paid-up Capital |
Time Value 2021 IDR 200 billion March 2022 IDR 275 billion March 2023 IDR 350 billion March 2024 IDR 425 billion March 2025 IDR 500 billion |
Time Value At the time of establishment and it must be fulfilled within two months as the company obtains the license from BAPPEBTI IDR 500 billion Within three months as of the company obtains the license from BAPPEBTI The higher of IDR 1 trillion or 2% of the transaction amount facilitated or reported (which one is greater) |
| Equity Maintenance | Time Value
2021 IDR 150 billion March 2022 IDR 225 billion March 2023 IDR 300 billion March 2024 IDR 375 billion March 2025 IDR 450 billion |
Time Value
At the time of establishment and it must be fulfilled within two months as the company obtains the license from BAPPEBTI IDR 400 billion Within three months as of the company obtains the license from BAPPEBTI 80% of the minimum issued and paid-up capital (at a minimum amount of IDR 800 billion) |
| Other Requirements |
|
|
- Futures Clearing Institution
| Old Regulation | New Regulation | |
| Minimum Issued and Paid-up Capital | Time Value
2021 IDR 250 billion March 2022 IDR 300 billion March 2023 IDR 350 billion March 2024 IDR 425 billion March 2025 IDR 500 billion |
IDR 500 billion |
| Equity Maintenance | Time Value
2021 IDR 200 billion March 2022 IDR 250 billion March 2023 IDR 300 billion March 2024 IDR 375 billion March 2025 IDR 450 billion |
IDR 400 billion |
| Other Requirements |
|
|
- Manager of Crypto-Asset Storage
| Old Regulation | New Regulation | |
| Minimum Issued and Paid-up Capital | IDR 50 billion | IDR 250 billion |
| Equity Maintenance | IDR 40 billion | IDR 200 billion |
| Other Requirements |
|
|
Registration of Crypto-Asset Trader Applicant
Before any Futures Exchange and Futures Clearing Institution obtains the licenses from BAPPEBTI, any existing undertaking that engages in activities that fall within the scope of Trader under the New Regulation may continue to operate provided that it has applied for registration to BAPPEBTI to obtain Registration as a Trader Applicant. To be registered as a Trader Applicant in BAPPEBTI, the undertakings must fulfill the following requirements:
| Old Regulation | New Regulation | |
| Minimum Issued and Paid-up Capital | IDR 25 billion | IDR 50 billion |
| Equity Maintenance | IDR 20 billion | IDR 40 billion |
| Other Requirements |
|
|
Registration as a Trader Applicant will be valid until there is any licensed Futures Exchange and Futures Clearing Institution by the BAPPEBTI. In this case, the Trader Applicant must convert its license and apply for a Trader’s license by at least one month after the license of the Futures Exchange and Futures Clearing Institution issued by the BAPPEBTI. Further, the Trader Applicant must also fulfill all requirements for the Trader’s license within one year after the application is submitted to the BAPPEBTI.
Trading Mechanism
The New Regulation regulates the trading mechanism for the trading of Crypto-Assets in the Physical Market. Below is the summary of the important trading mechanism as regulated in the New Regulation:
- Agreement between Trader and Customer
The New Regulation sets out new provisions where the Trader is obliged to send a copy of the agreement on crypto-asset trading to the customer’s registered email. Further, the customer must read and agree to any information and statement that relates to the company’s profile, risk statement, trading rules before placing any fund for a crypto transaction.
- Travel Rules Principle
The New Regulation introduces the concept of ‘travel rules’ for providing service of crypto-assets transfer to customers. The rule is as follow:
- If the threshold of the transaction is more than or equal to the Rupiah value that is equivalent to USD 1,000, the Trader must obtain information on (i) name, wallet address, identity card, address, and place and date of birth of the sender; and (ii) name, wallet address, and address of the recipient (in the event the recipient or the wallet address includes cold wallet or wallet outside of the Trader).
- If the threshold of the transaction is less than the Rupiah value that is equivalent to USD 1,000, the Trader must obtain information on the name and wallet address of both the sender and the recipient.
The wallet that is referred to in this section means the media that is used by the users to store their Crypto-Assets.
- Know Your Transaction Principle
Similar to other financial services, the New Regulation regulates that the Trader must implement know your transaction principle in conducting the trading of the Crypto-Assets. The Trader is required to monitor and review the current and past crypto-asset transactions in order to identify any suspicious transactions in connection with crypto-assets. The know your transaction principle should be implemented through regulatory technology such as blockchain analytic tools application.
Transitional Provisions
The New Regulation states that the undertakings who have been registered as a Trader Applicant prior to the issuance of this New Regulation must comply with the regulations in the New Regulation within six months as of the issuance date of the New Regulation (by 29 April 2022).
Author’s Note
At a glance, we note that the New Regulation is issued to enhance the regulatory framework for the opening of Futures Exchange, Futures Clearing Institution, and Manager of Crypto-Asset Storage in Indonesia. The New Regulation seems to regulate stricter requirements for the undertakings who want to act as a Futures Exchange, Futures Clearing Institution, and Manager of Crypto-Asset Storage. We believe this is to ensure the safety of the public who wish to invest in Crypto-Assets – so that no scammers are acting as one of the key players in Crypto-Assets trading as only the qualified undertakings can apply for the license with the BAPEBBTI.
Up to November 2021, we note that there is no Futures Exchange, Futures Clearing Institution, Trader, or Manager of Crypto-Asset Storage of crypto-assets trading that have obtained licenses from BAPPEBTI yet. BAPPEBTI confirmed that as of now, only a few Trader’s Applicants have been registered with the BAPPEBTI.
*Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect and/or represent the views, opinions, or positions of Ali Budiardjo Nugroho Reksodiputro (ABNR) whatsoever.
