Indonesia's Crypto Market Poised for a 2024 Resurgence, Projecting Record Volumes

Is Indonesia's Crypto Market Poised for a Resurgence in 2024?

The Commodity Futures Trading Supervisory Agency of Indonesia (Bappebti) is optimistic about the future of crypto transactions in the country, projecting that the volume could reach or even exceed the record levels of 2021, when transactions hit nearly IDR 860 trillion (over $51 billion).

Surge in Transaction Volume

Recent data suggests that Bappebti's projections may be well-founded. The agency's head, Tirta Karma Senjaya, reported an increase in transaction volume of around IDR 30 trillion ($1.92 billion) in February, adding to the record value of crypto transactions in January, which was IDR 21.6 trillion.

"Transactions have started to increase because Bitcoin and several altcoins have increased in price," Senjaya explained, pointing to the upcoming Bitcoin halving as a potential catalyst for further price and trading volume increases.

Growth in Crypto Investors

The number of registered crypto investors in Indonesia has also surged, reaching 19 million people in February. This is a significant increase from the number of stock traders registered in the country.

Crypto Regulation in Indonesia

Indonesia has implemented specific regulations for cryptocurrency, including the launch of a national crypto asset bourse (CFX) in 2023 to provide regulators with transaction records for tax purposes and protect investors. Exchanges must be licensed and recognized as legitimate companies linked to the CFX to operate in the country.

Regulatory Transition

Bappebti will continue to oversee crypto trading until the end of this year, but the Financial Services Authority (OJK) is expected to take over fully from January 2025. This transition could lead to changes in existing laws and regulations, potentially reclassifying crypto from commodities to securities.

OJK's Role

The OJK has recently issued new regulations providing guidance for financial institutions on implementing technological innovations, protecting customers, and operating digital financial assets, including crypto. These regulations are not yet comprehensive, but the OJK is working with financial authorities from other countries to develop better policies.

Tax Implications

The regulatory change may also impact the current tax approach to crypto in Indonesia. Currently, crypto transactions are subject to a 0.1% income tax and a 0.11% VAT. Exchanges must also pay around 0.02% in taxes to the national crypto bourse. The tax revenue from crypto transactions fell 62% in 2023 compared to the previous year, with local exchanges attributing the decline to the taxes.

Pro-Crypto Leadership

Indonesia's leadership appears to be supportive of the crypto industry. The recent election of a crypto-friendly president and vice president suggests that the pro-crypto policy in the country is likely to continue.