Indonesia Wants To Stop Crypto Exchanges From Reinvesting User Funds

Indonesia is considering stopping crypto exchanges that reinvest user funds. For this, the country would like to change the regulations to remove foreign ownership of exchange platforms.

The decision is expected to be published by the Commodity Futures Trading Regulatory Agency (Bappetbi) in the coming days.

A new rule that changes everything

Indonesia is studying the possibility of introducing a new rule that the board of directors of crypto companies must be made up of 66% of members and directors living in the country. The announcement was made by Indonesia’s Deputy Commerce Minister, Jerry Sambuaga in the face of reporters as he emerged from a parliamentary hearing.

It is apparent from his remarks that his ministry undertook not to randomly hand out permits to crypto exchanges. Only platforms that the ministry considers credible will be issued a permit. Thus, the ministerial department will reassure itself that these platforms meet all the necessary conditions.

Other conditions will accompany the removal of the reinvestment of user funds. While Indonesia plans to ban exchanges from reinvesting stored assets, the country also wants to force exchanges to use third-party services to safeguard client funds.

No date has been set for the publication of the new rules or for the application of the requirements for exchanges.

Indonesia is a country with a strong crypto culture

Indonesia has the image of a country with a culture strongly rooted in cryptocurrency. The regulation of digital assets is a challenge for authorities who are multiplying measures to regulate the market. With this in mind, the authorities do not hesitate to sanction players who do not respect the rules.

For example, crypto merchants and payment processors were sanctioned last year for not having a license to operate. Indonesia’s regulatory efforts make sense as the archipelago represents one of the biggest crypto users in the world. YouGov rated crypto transaction activity at double the global average in the month of April 2022.

In 2018, the Asian country made cryptocurrency trading official by considering it an asset class in its own right. Digital assets can therefore officially be traded like commodities on centralized exchanges. Despite this legalization, there are only 229 cryptographic assets approved for trading by the licensed authority Bappetbi.

The announcement of new regulations comes in a difficult context that has seen several major crypto projects collapse. For example, the Terra (LUNA) project and the Zipmex exchange owned by Do Kwon and Marcus Lim respectively met a dark fate. Crypto promoter Terra has gone on the run after his project failed and an arrest warrant has been issued for him in South Korea.

It is this kind of problem that the authorities want to avoid in Indonesia by taking strict regulatory measures. It will be impossible for a crypto promoter to leave the country in case of worries.

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