Indonesia Wants Crypto Exchanges to Stop Reinvesting User Funds

Indonesia is mulling new rules on crypto exchanges to stamp out foreign ownership and stop reinvestment of user funds


Indonesia’s capital, Jakarta | Source: Shutterstock


key takeaways

  • Indonesia’s trade ministry wants two-thirds of crypto exchange board members and directors to be citizens residing within the country
  • Client funds will also need to be custodied by a third party while exchanges will be barred from reinvesting those stored assets

Indonesia will seek to clamp down on foreign ownership of crypto exchanges by introducing a new rule which mandates 66% of company board members and directors be citizens living within the country.

The ministry’s Commodity Futures Trading Regulatory Agency (Bappetbi) is expected to roll out the new ruling soon, Reuters reported Tuesday citing deputy trade minister Jerry Sambuaga.

Sambuaga told reporters after a parliamentary hearing that the ministry did not wish to carelessly dole out permits to exchanges. Instead, it would issue them to platforms that the ministry considers credible after meeting the necessary requirements.

Blockworks reached out to the ministry to better understand the timeframe for the ruling, as well as the requirements for exchanges, but a spokesperson wasn’t immediately available.

The agency will also mandate exchanges use a third party for the custody of client funds while prohibiting the marketplaces from reinvesting the stored assets, per the report, the latter resembling the primary activity of now-bankrupt crypto lenders Celsius and Voyager.

All this marks another step in Indonesia’s journey to regulating digital assets. Last year, the country cracked down on unlicensed crypto merchants and payment processors deemed to be operating outside the agency’s purview.

The archipelago nation, which consists of 17,000 separate islands, is one of the largest adopters of cryptocurrencies in the world, with transaction activity having exceeded twice the global average in April, according to YouGov.

Indonesia recognized crypto as a commodity and formalized trading of the asset class in 2018, including via centralized exchanges. Though under recent regulatory frameworks in 2019 and 2020, only 229 cryptoassets are legally sanctioned for trading by licensed entities in compliance with Bappetbi. 

It comes as the industry bore the brunt of several major project collapses including Do Kwon’s Terra ecosystem and Marcus Lim’s Zipmex exchange — which has a foothold in the country and is fighting to stay afloat through investment from outside parties. 

Kwon, whose ecosystem’s asset LUNA was legally sanctioned for trading in Indonesia via Zipmex, has a warrant out for his arrest in South Korea, with his current whereabouts unknown.

Didid Noordiatmoko, the agency’s acting head, told the parliamentary hearing on Tuesday its new ruling could prevent an exchange’s C-suite from bolting from the country when a problem crops up.

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.


Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Permissionless is a conference for founders, application developers, and users. Come meet the next generation of people building and using crypto.

recent research

Research Report Templates (1).png


Solana Mobile is a highly ambitious foray into the mobile consumer hardware market, seeking to open up a crypto-native distribution channel for mobile-first applications. The market for Solana Mobile devices has demonstrated a phenomenon whereby external market actors (e.g. Solana-native projects) continuously underwrite subsidies to Mobile consumers. The value of these subsidies, coming in the form of airdrops, trial programs, and exclusive NFT mints, have consistently covered the cost of the phone and generated positive returns for consumers. Given this trend in subsidies, the unit economics in the market for Mobile devices, and the initial growth rate and trajectory of sales, it should be expected that Solana mobile can clear 1M to 10M units over the coming years. As more devices circulate amongst users, Solana Mobile presents a promising venue for the emergence of killer-applications uniquely enabled by this mobile-first, crypto-native distribution channel.


Crypto’s Wild West era is over — it’s time to embrace regulation to secure the future of digital assets


Plus, Solana has now surpassed Ethereum in trailing 30-day decentralized exchange volume


Polymarket betters say Kamala Harris has better odds than Biden of winning against Trump


Bitcoin’s down Tuesday, while ETH-correlated assets like ENS and ARB see growth


Plus, let’s check on the nine ether ETFs now trading on US exchanges