Is there a way for a country to reconcile a strict “crypto is not money” approach with a desire to not miss out on the benefits crypto industry can bring?
Indonesia may have an idea.
While Indonesian Central Bank is nurturing the idea of a CBDC as a “part of an effort to address the use of crypto in financial transactions”, and its Financial Service Authority prohibits financial service providers from facilitating crypto trading, the country’s commodities authority took crypto under its wing.
Assimilating cryptoassets to commodities can allow them to develop in parallel with the financial market: people can trade them, but not use as payment (even if the line between the two is thin).
The BAPPEBTI, an Indonesian Commodity Futures Trading Regulatory Agency, has already licensed 17 crypto exchanges, which record an ever-increasing demand for crypto: the number of crypto holders is estimated at over 12 million people. It has also whitelisted over 200 cryptoassets.
As a commodity, crypto should logically be taxed with both income tax on capital gains and VAT on purchase. Indonesian tax authorities followed the logic and have recently set both of these taxes at… 0.1%. Comparing to most countries’ capital gain tax of around 30% (including the neighbouring India), 0.1% looks like an incentive.
The BAPPEBTI’s goodwill and Indonesia’s potential haven’t gone unnoticed by the CEO of the world’s biggest exchange Binance, who last December announced his plans to create a new exchange in the country. Will 0.1% tax attract other crypto actors?