Bappebti suspends the registration of crypto asset broker candidates
08 September 2022
1. Background
Cryptocurrencies (or crypto assets as they are referred to in the regulations) in Indonesia are treated as commodities under the supervision of the Futures Commodity Trading Supervisory Agency (Badan Pengawas Perdagangan Berjangka Komoditi or "Bappebti") of the Ministry of Trade of the Republic of Indonesia ("MOT")1 .
The relevant parties involved in crypto assets trading in Indonesia are as follows:
(a) The crypto asset issuer, which issues the crypto assets in Indonesia to be traded via Futures Exchange/Broker (as defined below).
(b) The futures exchange which organises and provides the systems and/or facilities for crypto asset commodity trading activities based on futures contracts ("Future Exchange").
(c) The crypto asset physical trader ("Broker"), which obtains Bappebti's approval to carry out the transactions relating to crypto assets, on its own and/or on the customers' behalf.
(d) The futures clearing house, which provides and establish a system and/or means for the clearing, and guarantee for completion, of futures trade transactions.
As of to date, there are no Brokers or Futures Exchanges in Indonesia that have obtained Bappebti's approval, as all of their applications are still being reviewed by Bappebti, and certain specific standards and requirements are still to be met by the applicants.
However, although no approval have been issued by Bappebti for Brokers or Futures Exchanges, until recently Broker applicants could register themselves as a Broker Candidate (Calon Pedagang Fisik) in order to facilitate crypto asset trading whilst waiting for Bappebti to issue its approval of the Futures Exchange and Broker2. Evidence of such registration will be in the form of a Registration Certificate (Tanda Daftar) issued by Bappebti, which allows Broker Candidate to commence and facilitate crypto assets trading activities in Indonesia3. The list of Broker Candidates that have obtained a Registration Certificate is publicly available via Bappebti's website at: (https://bappebti.go.id/calon_pedagang_aset_kripto). At the date of this Client Alert, there are 25 Broker Candidates who have obtained their effective Registration Certificates from Bappebti, including some well-known names such as Tokocrypto, Pluang, and Indodax.
On 15 August 2022, Bappebti issued its Circular Letter No. 208/BAPPEBTI/SE/08/2022 on the Suspension of the Issuance of Registration Licenses for Crypto Assets Physical Trader Candidates (the "Circular Letter"), which suspends the issuance of Registration Certificates for Broker Candidates until further notice.
2. Key Provisions
2.1 Reason for suspension
The Circular Letter does not provide much detail on Bappebti's reasoning for suspending the registration process. The Recitals of the Circular Letter only state that the suspension is implemented to: (i) support crypto assets trading activities that are "transparent, efficient and effective in a healthy competition environment" in order to protect the interests of all parties in such activities; and (ii) enhance Bappebti's effectiveness in supervising crypto assets trading activities.
Our sources at Bappebti state that, in addition to the above reasons, the suspension is aimed at increasing the focus of Bappebti's supervision to ensure that each of the existing registered Brokers is competent and fully-prepared to provide secure platforms for users to transact crypto assets in Indonesia.
2.2 Scope of suspension
The scope of services suspended by Bappebti under the Circular Letter only covers the issuance of Registration Certificates for Broker Candidates. No other registration or licensing processes are affected by the issuance of the Circular Letter.
The Circular Letter is silent on whether Bappebti will continue to process applications for the Registration Certificate that were made before 15 August 2022 but are not yet completed; or whether fresh applications will need to be lodged once the suspension is lifted.
The Circular Letter is silent on how long the suspension will be in place. We will monitor any updates that Bappebti may issue in relation to this point.
3. Conclusion
The suspension may seem abrupt to some, but, given the massive development in this cryptocurrency space, the Circular Letter actually shows Bappebti's serious efforts to increase it, supervision of the development of currently existing crypto exchange platforms, which in the longer run should benefit the users of these platforms in conducting safe and secure crypto assets transactions.
On the other hand, the fact that the suspension period is not set will likely hinder investment in the cryptocurrency space in Indonesia (at least in the short term), and players and investors with precise expansion plans and tight investment timelines might look to other markets until there is clarity on the lifting of the suspension.
Authors: Dion Alfadya, Partner; Anggarara Hamami, Senior Associate; and Indra Dwinugroho Sudrajat, Associate
1. Article 1 of the Bappebti Regulation No. 8 of 2021 on the Guidelines for the Implementation of Crypto Asset Trading on Futures Exchanges ("Regulation 8/2021")
2. Article 40 of Regulation 8/2021.
3. Provided that they comply with the requirements set out in Article 40 to Article 42 of Regulation 8/2021.
