Guideline On Crypto Asset Trading: Key Points In The Commodity Futures Trade Supervisory Board Regulation No. 8 Of 2021 On Implementing Guideline Of Physical Market Trading Of Crypto Assets In The Futures Exchange – Fin Tech

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To provide public certainty in crypto asset trading, the
Commodity Futures Trade Supervisory Board/ Badan Pengawas
Perdagangan Berjangka Komoditi

(“Bappebti“) has issued Regulation No. 8
of 2021 on Implementing Guideline of Physical Market Trading of
Crypto Assets in the Futures Exchange (“Reg.
8/2021
“). Reg. 8/2021 revokes the previous Bappebti
regulations regarding Crypto Assets, which stipulated the amended
guideline of crypto asset trading in the market.

Article 13 (2) Reg. 8/2021 stipulates that a crypto-asset
physical trader who wants to be a facilitator in the crypto asset
market must obtain an approval from Bappebti. This regulation also
limits the scope of activities of a crypto asset physical trader,
to include as follows:

  1. Sell and/or purchase of crypto assets between Crypto and Rupiah
    currencies;
  2. Exchange one or more types of crypto assets;
  3. Storage of crypto assets owned by the customer; and
  4. Transfer or relocate crypto assets between wallets.

In this article, we provide several changes in Reg. 8/2021,
including those on the requirements for Crypto Asset Trading,
Crypto-Asset Traders, and Prospective Crypto Asset Traders.

A. Requirements for Crypto Asset Trading

Pursuant to Article 3 (2) Reg. 8/2021, crypto assets traded in
the market must conform to certain requirements to make them lawful
as tradable crypto assets. The requirements for a tradeable crypto
asset are:

  1. the asset is based on distributed ledger technology;
  2. it is in the form of utility crypto asset or crypto backed
    asset; and
  3. it has passed the assessment with the Analytical Hierarchy
    Process (“AHP“) method set by
    Bappebti.

During the AHP assessment, Bappebti must consider several
conditions, which are (Article 3 (3) of Reg. 8/2021):

  1. the crypto asset market capitalization value (coin market
    cap);
  2. the asset is included in a major transaction exchange for
    crypto assets;
  3. the asset has economic benefits to offer (i.e., taxation,
    digital economic growth, information technology
    (“IT“), information industry, and
    competency of IT field experts); and
  4. the asset has completed a risk assessment including the risks
    of money laundering, terrorism financing, and weapons of mass
    destruction financing.

If the crypto asset is deemed tradable in the crypto asset
physical market, Bappebti will issue a stipulation and the asset
will be included in Bappebti’s list of crypto assets.
Furthermore, Article 5 paragraph (1) of Reg. 8/2021 stipulates that
a crypto asset trading can only be conducted using an electronic
tool owned by the physical trader, where the trade process is
facilitated and supervised by the futures exchange and approved by
the Head of Bappebti. In addition, the Futures Clearing Agency
responsible for the clearing and completion of the transaction must
obtain the approval of the Head of Bappebti.

B. Prospective Crypto Asset Trader

Article 40 paragraph (1) of Reg. 8/2021 stipulates that if the
futures exchange and clearing agency are not registered at
Bappebti, a business actor that carries out activities as described
in Article 13 (2) Reg. 8/2021 must register the company at Bappebti
as a prospective crypto-asset physical trader
(“Prospective Trader“). For the
registration, the Prospective Trader must meet the following
prerequisites:

  1. it has a minimum paid-up capital of Rp50,000,000,000 (fifty
    billion Rupiahs); and
  2. it maintains an equity of, at least, 80% (eighty percent) of
    the paid-up capital;

Furthermore, the Prospective Trader must provide the following
documents to Bappebti:

  1. Copy of deed of establishment and the identities of the
    company’s executives;
  2. Written brief explanation regarding the company’s
    organizational structure including its responsibilities, products,
    business process, and code of conduct;
  3. Proof of the electronic system submission to the Ministry of
    Communication and Information
    (“MoCI“);
  4. Business plan and financial projection for the next 24 (twenty
    four) months; and
  5. Other required documents as mentioned in the appendices of Reg.
    8/2021.

Once the requirements are deemed complete, the Head of Bappebti
will issue a registration receipt for the Prospective Trader within
3 (three) working days (“Prospective Trader
Registration
“). The registration will remain valid
until Bappebti issue the licenses for both the futures exchange and
clearing agency.

C. Requirements for Crypto-Asset Trader

If the licences are issued, the Prospective Trader must apply
for an approval to Bappebti as a physical trader of crypto assets
(“Crypto Asset Trader“) within 1 (one)
month, and they must comply with all requirements under the
crypto-asset trader license within1 (one) year since the submission
of the application (Article 42 Paragraphs (1) and (2) of Reg.
8/2021). Failure to complete the process will cause the Prospective
Trader’s registration to be declared cancelled and void.

A Crypto Asset Trader must fulfil the requirements as stipulated
in Article 14 (1) Reg. 8/2021:

  1. Having the minimum paid-up capital of IDR 80,000,000,000
    (eighty billion Rupiahs);
  2. Maintaining an equity of, at least, 80% of the paid-up
    capital;
  3. Having a company structure with, at least, 6 (six) divisions
    (i.e., IT, audit, legal, customer complaint,
    client support, accounting, and finance);
  4. Owning a system or tool for online trading to facilitate the
    implementation of crypto-asset physical market, which is connected
    to both the futures exchange and clearing agency;
  5. Having official trading rules;
  6. Having a Standard Operating Procedure or SOP;
  7. Having, at least, one employee who is a Certified Information
    Systems Security Professional (“CISSP“),
    or who is in cooperation with an institution that has the experts,
    or who directly cooperates with CISSP experts; and
  8. Having the potential board of directors, commissioners,
    shareholders, controller or beneficial owner that have passed the
    fit-and-proper test conducted by Bappebti.

Furthermore, based on Article 16 (1) of Reg. 8/2021, any change
in the address, name of the company, management or shareholding
composition, system, trading rules, including in the opening of any
branch office requires Bappebti’s approval. This applies to
both the Prospective and Crypto Asset Traders.

D. Transition Terms

A business actor which has previously registered as Prospective
Trader before the issuance of Reg. 8/2021 (i.e., 29 October 2021)
must already observe the new provisions of Reg. 8/2021 within no
more than 6 (six) months after the date of issue.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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