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Cryptocurrency: Legality and Current Development in Indonesia

Legalitas Cryptocurrency

The development of technology and information in the era of globalization has affected the economic aspect, especially in the use of money from the original physical form to digital form, one of which is Cryptocurrency. Crypto trading activities have recently become public interest in in Indonesia. Its legality is often debated and many people are interested in learning more about it. This article will outline the important points of the regulations of Cryptocurrency asset trading in Indonesia.

A. Existence and Legality of Cryptocurrency 

Basically, Cryptocurrency is included in the form of Virtual currency, namely digital money issued by parties other than the monetary authority. The definition of Crypto currency is not explicitly regulated based on the rules in Indonesia, but it is known as Crypto Assets. Article 1 point 7 of (“Badan Pengawas Perdagangan Berjangka Komoditi, “BAPPEBTI“) Regulation Number 8 of 2021 on Guidelines of the Implementation of Physical Market Trading of Crypto Assets on Futures Exchanges (“BAPPEBTI Regulation 8/2021“) defines that Crypto Assets are intangible commodities in digital form, using cryptography, information technology networks, and books. distributed, to manage the creation of new units, verify transactions, and secure transactions without interference from other parties. Through Cryptocurrency Assets, there are various types of  Cryptocurrency circulating digitally.

According to Article 202 of Indonesian Bank Regulation Number 23/6/PBI/2021 on Payment Service Providers (“IBR 23/2021”), the types of Cryptocurrencies currently developing include Bitcoin, BlackCoin, Dash, Dogecoin, Litecoin, Namecoin, Nxt, Peercoin , Primecoin, Ripple, and Ven. These various types of Cryptocurrencies are currently in the spotlight in international trade which are used as payment instruments for buying and selling online. Therefore, this raises the question of whether Cryptocurrency can be used as a means of payment, especially under Indonesian law. According to Article 1 number 2 of Law Number 7 of 2011 on Currency (“Law 7/2011”) the definition of money is a legal payment instrument. While currency is money issued by the Unitary State of the Republic of Indonesia, namely rupiah. So that it can be interpreted that money is a payment instrument and when money is issued by the government or the competent authority then it becomes a currency. The currency recognized in Indonesia according to Law 7/2011 is the Rupiah. So that in principle, based on Article 21 paragraph (1) of Law 7/2011, the Rupiah must be used in the event:

  1. every transaction that has the purpose of payment;
  2. settlement of other obligations that must be met with money; and/orother financial transactions carried out in the Territory of the Unitary State of the Republic of Indonesia.

This is further be confirmed by the issuance of Indonesian Bank Regulation Number 17/3/PBI/2015 on Obligation to Use Rupiah in the Territory of the Unitary State of the Republic of Indonesia (“IBR 17/2015”) which stipulates the use of Rupiah as Indonesian currency in every transaction, both cash and non-cash. Article 20 paragraph (2) of IBR 17/2015 stipulates that violations of this matter will be imposed in the form of administrative sanctions among others:

  1. warning;
  2. temporary suspension of part or all of the implementation and;
  3. revocation of license as a Payment Service Provider (Penyedia Jasa Pembayaran, “PJP”).

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In addition, criminal sanctions will be imposed in the form of imprisonment for a maximum of 1 (one) year with/or a maximum fine of Rp. 200,000,000 (two hundred million Rupiah).

Long before the Cryptocurrency phenomenon was widely discussed lately, the Coordinating Minister for the Economy Letter No. S-302/M.EKON/09/2018 (“Letter of the Coordinating Minister for the Economy”) was issued which stated that Crypto assets were prohibited as  payment instruments but could be used as an investment instrumen. As a commodity that can be traded on the futures exchange, Crypto asset trading in Indonesia must be approved and supervised by BAPPEBTI. Through the letter from the Coordinating Minister for the Economy, BAPPEBTI issued BAPPEBTI Regulation Number 7 of 2020 on Establishment of a List of Crypto Assets that can be Traded in the Crypto Asset Physical Market (“BAPPEBTI Regulation 7/2020”) which stipulates that Cryptocurrencies are not recognized as legal payment instrument in territory of the Republic of Indonesia, but only functions as an asset that can be traded in the Crypto Asset Physical Market.

B. Crypto Asset Trading

According to Article 3 paragraph (2) of BAPPEBTI Regulation 8/2021, Crypto Assets can be traded in Indonesia for the following requirements:

  1. Crypto Asset traded must be a utility Crypto Asset or an asset-backed Crypto Asset;
  2. Trading activities are carried out based on distributed ledger technology; and
  3. Crypto Assets traded have passed the assessment through the Analytical Hierarchy Process method set by BAPPEBTI with due observance of the following provisions:
  1. market capitalization value (market cap) Crypto Assets (coin market cap);
  2.  the trade is part of the Crypto Asset transactions in the world;
  3. the trade has economic benefits, such as taxation, digital economic growth, the information technology industry, and the competence of experts in the field of informatics (digital talent); and
  4. The Crypto Asset has passed a risk assessment, which includes the risk of money laundering, terrorism financing, and the spread of weapons of mass destruction.

 

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C. Foreseeable Development

As mentioned that Indonesia still prohibits the use of Cryptocurrencies as a means of payment, but the Governor of Indonesian Bank has officially confirmed that the ban will remain in effect for at least the next ten years while denying the possibility of Cryptocurrencies being recognized as legal currencies in Indonesia in the future, Indonesian Bank has discussed plans to develop a digital rupiah currency towards digitizing payments.

 

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Disclaimer: This article has been prepared for scientific reading and marketing purposes only from ADCO Law. Accordingly, all the writings contained herein do not constitute the formal legal opinion of ADCO Law. Therefore, ADCO Law should be held harmless of and/or cannot be held responsible for anything performed by entities who use this writing outside the purposes of ADCO Law.