The Indonesian Commodity Futures Trading Regulatory Agency, or Bappebti, has granted crypto exchanges an extension to comply with the requirements for obtaining a Physical Crypto Asset Trader (PFAK) license.
This significant regulatory development, announced on 18 October 2024, allows exchanges until the last week of November 2024 to meet the updated standards, which could reshape the landscape of digital asset trading in the country.
Bappebti's latest regulation represents the third revision of the rules originally established in 2021.
The purpose of this amendment is to transition registered crypto exchanges (CPFAK) from their current provisional status to a fully licensed PFAK status.
This shift not only affects the operational status of existing exchanges but also opens the door for new participants in the digital asset market.
Oscar Darmawan, CEO of INDODAX, one of Indonesia’s leading crypto exchanges, expressed optimism about the extension, stating,
“We warmly welcome this decision, as it provides space for more exchangers to fulfill their obligations in accordance with applicable regulations.”
His comments highlight the broader implications of this extension, which aims to strengthen compliance and enhance the overall health of the crypto ecosystem.
The updated regulations have expanded the scope of who can engage in crypto trading.
Previously limited to individual investors, the new guidelines now allow legal entities and business enterprises to participate in the crypto market.
This move is expected to foster greater institutional involvement, stimulating growth and diversity within Indonesia's digital asset sector.
In addition to expanding participation, the regulations introduce requirements for Know Your Transaction (KYT) standards, along with cooperation agreements with the Indonesian Directorate General of Population and Civil Registration (Ditjen Dukcapil).
Aldison, Head of Bappebti’s Bureau of Legislation and Enforcement, emphasized the importance of these agreements, stating that they are essential for ensuring that crypto exchanges operate transparently and adhere to legal obligations.
What Happens If Compliance is Not Met?
Crypto exchanges that fail to meet the outlined requirements risk losing their registration.
All CPFAKs must secure membership in both the Crypto Asset Futures Exchange and the Crypto Asset Clearing House within seven working days of receiving their registration certificate.
Aldison warned,
“This must be fulfilled no later than seven working days since this Perba is stipulated,” highlighting the urgency and importance of compliance.
In a noteworthy achievement, Tokocrypto, a subsidiary of Binance, recently obtained its PFAK license, becoming the third exchange in Indonesia to secure this certification.
This milestone highlights Tokocrypto's significant presence in the market, with a user base exceeding 4.5 million and a trading volume that has surged by 170% since 2023.
Following Binance’s acquisition of Tokocrypto in December 2022, the company has captured an impressive 43% share of Indonesia’s crypto market.
The collaboration between Binance's Financial Intelligence Unit (FIU) and Tokocrypto has also borne fruit in the fight against crypto fraud.
Their joint efforts with Indonesia’s Criminal Investigation Agency, Bareskrim, have led to the arrest of multiple suspects involved in a scheme known as a “pig butchering scam,” resulting in the seizure of around $200,000 in fraudulent funds.
For INDODAX, the regulatory environment is of particular significance, especially following a substantial security breach on 11 September 2024, during which approximately $22 million in digital assets were stolen.
The exchange’s commitment to proper regulation is not only a response to past challenges but also a proactive measure to protect its users and bolster confidence in the market.
This latest extension from Bappebti offers a crucial opportunity for Indonesia’s crypto exchanges to enhance their operational frameworks and secure the necessary licensing, ultimately paving the way for a more robust and transparent digital asset market in the country.
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