In the cryptocurrency industry, regulations are still not clear cut and concrete. This is one of the factors that has hindered adoption in the space. Many people who have an interest in cryptocurrencies and the underlying blockchain technology are still afraid to dive into it because there isn’t any standard regulatory framework. Recently, however, the effort has been made by the watchdog in Indonesia. While these regulations are not for the entire industry, they are meant to regulate the trading of cryptocurrency futures.
Indonesian Watchdog Create Regulations For Cryptocurrency Futures Trading
Bappebti is the Indonesian Commodity Futures Trading Regulatory Agency. This agency operates under the Ministry of Trade in Indonesia. On Monday, the agency announced that every exchange that intends to enable cryptocurrency futures trading must be registered and approved by them. This means that exchanges that offer futures trading without a license will face legal action.
The report also stated that the agency now recognizes cryptocurrencies as commodities. These cryptocurrencies can now be traded on Indonesia’s futures exchange. The agency made its plans to make this happen public in June last year.
Indrasari Wisnu, the chief of Bappebti, during a statement on Monday, said that these regulations were put in place to offer the cryptocurrency futures sector the required legal framework to function. It will also protect investors and consumers from falling victim to fraudulent exchanges.
The document contained details about what the registration requirements are. For starters, clearing houses that deal with cryptocurrency assets need to pay up at least 1.5 trillion Indonesian rupiahs in the capital. This amounts to about $106 million at current exchange rates. They must also maintain at least 1.2 trillion as closing capital balance. This is equivalent to $85 million.
The document also stated that these companies must install good system security and must have at least three employees who are fully certified in information system security. These employees will frequently run risk assessment processes. This includes combating terrorism financing and anti-money laundering.
Bappebti set out clear rules for those who are interested in cryptocurrency futures trading as well as the providers of storage services. The rules state that both the service provider and the trader must be approved before they can operate. The trader and the storage service providers must have an open capital of at least one trillion Indonesian rupiahs and a closing balance of at least 80 billion Indonesia rupiahs.
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As stated in the document, these new regulations do not apply to initial coin offerings. Also, it did not lift the ban on cryptocurrencies as a means of payment. The news, which is supposed to be a good thing for cryptocurrency traders, has left them unhappy. This is because the minimum balance is incredibly high. Only a few institutional investors will be able to afford it. This is going to hinder the development of cryptocurrencies in the region.
One of the stakeholders, Oscar Darmawan, the CEO of Indodax, said that the large capital requirement is more than what is required to launch a rural bank. It is far higher than the minimum capital for traditional futures trading which is about $177,000.
Do you think the cryptocurrency industry in Indonesia can thrive under such strict regulations? Share your thoughts.