With the Indonesian government requiring cryptocurrency traders to keep a deposit of 80 billion rupiah (approximately $5.7 million) among other requirements in order to participate in futures trading, sector players have complained that this will strangle the nascent industry.
The new regulations were released last week by the Indonesian markets regulator, the Commodity Future Trading Regulatory Agency (BAPPEBTI).
Among the various requirements, the minimum paid-up capital levels have emerged as a major sticking point, per The Jakarta Post. Besides a minimum deposit of $5.7 million, there’s also a minimum paid-up capital of 100 billion rupiah ($7 million-plus) required.
Cryptocurrency exchanges, on the other hand, will be required to have a minimum capital of 1 trillion rupiah ($70.9 million). A minimum paid-up capital of 800 billion rupiah ($56.7 million) will also be required.
Additionally, the regulations are bound to increase operating costs. Traders dealing in cryptocurrency futures will be mandated to employ client support personnel. And at least one of these employees must be a certified security practitioner.
Cryptocurrency futures traders will also be required to store transaction records for a period of at least half a decade. One of their servers must also be located in Indonesia.
According to Reuters, industry players have complained that the requirements set for cryptocurrency futures by BAPPEBTI are even more stringent than for other sectors. For example, the minimum capital requirement exceeds what is demanded when launching a rural bank. Dealers in futures of commodities other than cryptocurrencies also require significantly lower minimum paid-up capital – 2.5 billion rupiah ($177,000).
In Indonesia bitcoin and other cryptocurrencies have been banned as a payment method for years now. As CCN reported two years ago, the ban was imposed by Bank Indonesia (BI), the Southeast Asian country’s central bank. At the time, the governor of Bank Indonesia, Agus Martowardojo, warned that flouting the ban would lead to serious consequences:
When the BI has asserted Bitcoin is not a valid payment instrument, those who use it will be dealt with. I do not want any violations in Indonesia.
The initiative to put in place regulations for cryptocurrency futures trading was started last year by BAPPEBTI.
The popularity of cryptocurrency trading in the world’s most populous Muslim-majority country hit headlines last year in March when it was reported that crypto traders were expected to outnumber stock traders with time. This was after the Indonesian cryptocurrency exchange Indonesia Digital Asset Exchange had revealed it was nearing 1.5 million users.
In comparison, the country’s stock exchange, the Indonesia Stock Exchange, boasted of 1.18 million registered traders then. At the time, the CEO of Indonesia Digital Asset Exchange Oscar Darmawan claimed that thousands were registering every day:
We are seeing almost 3,000 new members signing up everyday. Most people are trading in bitcoins though transactions in ethereum has increased significantly of late.
With the new stringent requirements set by BAPPEBTI, however, it is unlikely that Indonesia’s cryptocurrency futures sector will have a similar success story.