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Cryptocurrency is a digital currency that was first created in 2009 by Satoshi Nakamoto through the first cryptocurrency, Bitcoin. Over time, cryptocurrencies have undergone various developments and there are now several popular cryptocurrencies other than Bitcoin, such as Ethereum, Litecoin, and Binance Coin. However, although cryptocurrency, is by definition, a currency and has been in circulation globally for more than 10 years, the majority of countries in the world consider cryptocurrencies not as currencies, but as assets, including Indonesia.
In essence, Indonesia considers cryptocurrencies as assets and not as currencies. This is mainly due to the regulations in Law Number 7 of 2011 on Currency (“Currency Law”), which expressly defines Currency as money or legal means of payment issued by the Republic of Indonesia, namely Rupiah. Moreover, Article 21 paragraph (1) of the Currency Law stipulates that Rupiah shall be used in the Territory of the Republic of Indonesia in (i) any transaction that has the purpose of payment, (ii) the settlement of other obligations that must be fulfilled with money; and/or (iii) other financial transactions. The provisions of the use of Rupiah as the only legal means of payment in Indonesia is strengthened through Article 33 paragraph (1) of the Currency Law which stipulate criminal sanctions if Article 21 paragraph (1) above are not adhered to.
Therefore, the Coordinating Minister of Economy issued a Letter of the Coordinating Minister of Economy Number S-302/M.EKON/09/2018 dated 24 September 2018 regarding the Follow-up to the Coordination Meeting on Crypto Asset Management as a Commodity Traded on the Futures Exchange, which states the following.
1. Crypto assets have great potential for the growth of domestic start-ups and prevent potential outflows abroad;
2. Crypto Assets are still prohibited as payment instruments according to Law Number 7 of 2011 concerning Currencies, but can be categorized as commodities traded on the Futures Exchange;
3. The scope of “Commodity” traded on the Futures Exchange has been regulated in Law Number 10 of 2011 concerning Amendments to Law Number 32 of 1997 concerning Commodity Futures Trading, which is under the jurisdiction of the Commodity Futures Trading Supervisory Agency (“Bappebti”);
4. Crypto Assets will first be regulated in a Regulation of the Minister of Trade which includes Crypto Assets as one of the commodities traded on the Futures Exchange;
5. Further arrangements related to technical matters and to accommodate inputs from Ministries/Agencies will be compiled in the form of Bappebti Regulations.
Thus, there is legal certainty that cryptocurrencies are not treated as currency in Indonesia, but as assets.
El Salvador was the first country to legalize one type of cryptocurrency, namely Bitcoin, as legal tender on 7 September 2021. This is motivated by the small number of residents of El Salvador who have access to bank services and the large percentage of El Salvador’s Gross Domestic Product (GDP) that comes from remittances from abroad. This is motivated by the small number of residents
of El Salvador who have access to bank services and the large percentage of El Salvador’s Gross Domestic Product (GDP) that comes from remittances from abroad. Therefore, in order to minimize the cost of sending money from abroad and increase the percentage of El Salvador residents who have access to bank services, the Government of El Salvador utilizes Bitcoin. It is clear that cryptocurrency in Indonesia is not a currency, but an asset or commodity. This is in contrast to El Salvador which chooses to regulate cryptocurrency, specifically Bitcoin, as a currency because of their specific needs to their citizens. Whether Indonesia will follow suit in the future remains to be seen.