Indonesian Blockchain Association Calls Unlicensed Foreign Exchanges Potential to Harm the Country

Indonesian Blockchain Association. (Special)

JAKARTA - The Indonesian Blockchain Association (ABI) claims to have sent a letter to the Commodity Futures Trading Regulatory Agency (Bappebti), Ministry of Trade. The letter is a complaint regarding a foreign crypto exchanger in Indonesia.

ABI's Supervisory Board, Pandu Sastrowardoyo, said that his party complained about the large number of foreign exchangers operating in Indonesia but the existing regulations had not been touched.

Many of these foreign crypto exchanges have not been registered with Bappebti. One of the complaints is Binance.

"Binance is only one example of the 300 that have been mentioned with large users in Indonesia. This is a concern for the government itself. From the industry itself, we have sent a letter to CoFTRA regarding this exchange," he told journalists, Sunday, August 20.

Pandu admitted that ABI had made a study to calculate how much the state would lose if this practice continued. One form of loss is the outflow of capital flows in the country.

Because in practice, there are foreign crypto exchanges that have not been registered with Bappebti, but can be accessed by crypto investors. Transactions made by local investors are then processed in foreign exchange systems.

"For example, there are foreign exchangers who have not been verified in Indonesia but are very easy to access and many other services in Indonesia have not been regulated. So many don't do it so they return to Indonesia to buy big coins like Bitcoin and Etherium and then they use other services. abroad and this is a concern in itself," he said.

Pandu assesses that there is a gap that causes the state to lose because many foreign exchangers have not been registered. According to him, one solution that can be done is to block both the website and the application.

"There are some that I know whose website has been banned, but the application can still be installed and used. So again, if we from the industry try to make a study to show what state losses are like because we know state revenue for crypto taxes in May-September last year it's quite big. So the potential could be even bigger if this is caught in the Ministry of Finance," he said.

Meanwhile, Head of the Commodity Futures Trading Supervisory Agency (Bappebti) Didid Noordiatmoko acknowledged that the absorption of national crypto taxes had not been optimal.

He explained, the not yet optimal crypto tax revenue could not be separated from the still sluggish crypto market in 2022.

"Crypto transactions in 2022 are much lower compared to 2021. In 2021 it will be IDR 859.9 trillion and 2022 around IDR 300 trillion. This means that the potential will indeed decrease in 2022," he said.

"But the new tax will be imposed in May 2022. So if we compare the May-December transaction value, that number is also relevant. This means that there are no transactions that are not taxable," he said.

The government itself sets rates for crypto asset transactions of 0.1% for Article 22 Income Tax and 0.11% for final VAT. This rate is for transactions at domestic exchangers that have been registered with CoFTRA.

Meanwhile, for crypto transactions on foreign exchanges, the rates are 0.2% for Article 22 Income Tax and 0.22% for final VAT. However, the problem is that taxation for crypto transactions on foreign exchanges is still not optimal.

"The problem is trading abroad, how do we know that we are transacting in Indonesia. Because it is clear that they are not licensed, and they are not entering Indonesia. In fact, our investors are buying from those abroad," he explained.

Didid explained that until now crypto transactions carried out by Indonesian investors abroad were still difficult to detect. So that the imposition of tax rates is difficult to do.

The Ministry of Trade has made strategic steps in accelerating the development of the crypto asset industry, including the formation of Futures Exchanges, Futures Clearing, and Depository Managers for Organizing the Physical Market for Crypto Assets.