Indonesia’s Futures Exchange Supervisory Board (Bappebti) has announced new regulations on the implementation of physical markets for crypto assets in futures trading. The rules focus on good governance for cryptocurrency tradèrs, legal certainty and consumer protection. They will also require the regulator to establish a physical market for futures trading in virtual currencies.
Indonesia Enters Early Phase of Crypto Regulation
Jakarta Post, a local daily, has said Bappebti’s move signals that the Indonesian cryptocurrency industry is now entering the “early phases of regulation” from a government that has hitherto resisted attempts at recognizing crypto as a legitimate financial tool.
According to the article, the new framework will also regulate all tradable crypto assets, including mechanisms for buying and selling, starting from account opening and fund saving as well as withdrawal of cryptocurrencies in both fiat and non-cash terms.
Futures generally refer to financial contracts that compel the buyer to purchase an asset or the seller to sell an asset, in this case cryptocurrency, at a predetermined future date and price. For example, Hong Kong-based Coinflex exchange announced in January that it was planning to offer futures contracts for bitcoin core (BTC), bitcoin cash (BCH), and ethereum (ETH) with leverage of up to 20x beginning next month.
All futures bought and sold on the exchange will be physically delivered, meaning that when the contracts expire, holders will be paid the underlying cryptocurrency instead of cash. Not all futures are physically delivered, but the concept is broadly still the same. Other exchanges such as Intercontinental Exchange Inc., which owns the New York Stock Exchange, and Chicago-based Eris Exchange have also revealed plans to introduce physically delivered futures for BTC.
Minimum Capital Thresholds Too High
In Indonesia, Bappebti, which operates under the Ministry of Trade, proposed a funding framework for operators of futures exchanges that local industry participants regard as very high. Under Article 24 of the new regulations, a physical trader of crypto assets is required to transfer 100 billion rupiah (about $7.13 million) to their accounts. At least 80 billion rupiah of that amount must be kept as a deposit, Jakarta Post reported.
Another section of the regulations indicates that “to be approved as a facilitator of customers in crypto-asset transactions, physical traders are required to transfer one and a half trillion rupiah (about $107 million) in capital and keep 1.2 trillion rupiah in their accounts.” Similar capital thresholds apply to those intending to function as clearinghouses.
The article quoted an official with the local cryptocurrency exchange Rekeningku.com who complained that the minimum capital required for physical traders to own in cryptocurrency was “too high.” The official said the industry was looking to discuss the matter with the Futures Exchange Supervisory Body, possibly for a downward review.
However, the Indonesian government, which considers cryptocurrency to be a commodity, has previously expressed concern at the level of risk and theft that sometimes occurs in the crypto sphere. The high minimum capital thresholds might be an attempt to address similar fears.
Dharma Yoga, a senior official with Bappebti, said last year that any regulation of the crypto industry in Indonesia would introduce measures to prevent the loss of funds due to embezzlement or hacking of crypto platforms.
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