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Crypto Asset Tax: Competitiveness and Industrial Growth in Indonesia

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The crypto asset market, which previously experienced a high transaction volume, faced a significant decline in 2023. In this article, Asosiasi Blockchain Indonesia will review the causes of this shrinkage in depth, analyze the latest data, explore responses from business actors and government bodies, and underline the factors influencing the dynamics of the crypto asset market.

The Decrease in Crypto Asset Transactions and Its Causes
The decrease in crypto asset transactions has captured worldwide attention, fueling intense discussions within the market. Several issues, such as the collapse of FTX in 2022 and lawsuits from the U.S. Securities & Exchange Commission (SEC) against Binance and Coinbase. These issues are seen as catalysts for the diminishing consumer interest in crypto assets on a global scale, consequently leading to a notable decrease in transactions within the Indonesian market.

As known, the Bitcoin value in the global crypto market has once again been recorded at US$44k  or around IDR 683 million, reaching its highest level for the first time since April 2022. Data from the Commodity Futures Trading Supervisory Agency (Bappebti) shows that the value of crypto asset transactions from January to November 2023 has reached IDR 122 trillion. Despite the rise in Bitcoin value, this figure indicates a significant decrease compared to the previous year, which reached IDR 306.4 trillion and is even much lower than the peak period in 2021, which reached IDR 859.4 trillion. The question remains: What factors caused the decrease in transaction volume?

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Various complex factors contribute to this decline. “The reason is that the peak period has passed, interest has waned, and the real sector at that time was not yet thriving due to the pandemic”, said Hasan Fawzi, Chief Executive Supervisor of the Financial Sector Technology Innovation, Digital Financial Assets, and Crypto Assets Sector, and concurrently Member of the OJK Board of Commissioners. According to CNBC Indonesia, OJK explained that high tax rates were one of the causes behind the decline in crypto asset transaction volume.

Crypto Asset Tax
Since May 2022, every crypto transaction in Indonesia has been subject to a Value Added Tax (VAT) of 0.11% of the transaction value for exchanges registered with Bappebti and an Income Tax (PPh) of 0.1%. Let’s explore how crypto asset transaction costs compare between registered and unregistered exchanges under Bappebti. Here’s an illustration:

Comparison of Crypto Asset Transaction Fees
Registered and Unregistered Exchanges

Registered Exchanges under Bappebti

Unregistered under Bappebti

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  • Buy BTC                                                         : 0.10%
  • VAT                                                                                : 0.11%
  • Sell USDR                                                      : 0.10%
  • Sales Income Tax                                            : 0.10%

Total commission per transaction
must be charged (including tax) 0.41%

  • Transaction Fee                                     : 0.00% – 0.1%

 

 

Total transaction costs (including tax)0.00% – 0.1%

*This is an example of a general overview of transaction fees – each exchange can have a different percentage

The data above shows a significant difference in the total transaction costs on registered exchanges, which tend to be higher. When designing tax policies for crypto assets, it is crucial to consider the overall impact on the industry’s growth.

In response to this challenge, Daniel Sukamto, CEO of digitalexchange.id, expressed, “It is hoped that there will be an adjustment to tax rates that will not burden the users”. Oscar Darmawan, CEO of Indodax, also added, “This is to ensure that users can make transactions more freely without feeling burdened”. This effort is anticipated to positively stimulate the increased tax revenues, as users will likely conduct more transactions on officially registered crypto asset industry platforms in Indonesia.

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Implementing taxes on crypto assets positively impacts the industry, as a significant contributor to the Indonesian economy. Moreover, this will create transparency and support the industry’s sustainability at the national level. “With the implementation of more competitive and cooperative tax policies, it is hoped that this will result in more increased transactions,” said Robby, Chairman of the Indonesian Blockchain & Crypto Asset Traders Association (A-B-I & Aspakrindo).

Solutions for Crypto Asset Tax
In addition to adjusting tax rates, the Association hopes to have the opportunity to discuss with the Directorate General of Taxes (DJP) to provide an overview and find mutually beneficial solutions to ensure the crypto industry’s growth in Indonesia and optimize tax revenues. Yudhono Rawis, CEO of Tokocrypto, conveyed several examples of concrete solutions, including:

  • Adjusting crypto asset tax rates to make transaction fees more competitive for customers on registered exchanges.
  • Implementing a tax amnesty program for taxpayers with crypto assets abroad to increase crypto tax revenues in Indonesia.

Not only that, Asih Karnengsih, Executive Director of A-B-I & Aspakrindo, also presented several other solutions:

  • As Law No. 4 of 2023 concerning Strengthening and Development of the Financial Sector (UU PPSK) classifies crypto assets as digital financial assets, there could be an exemption from VAT collection. This aligns with Law No. 7 of 2021 concerning Harmonization of Tax Regulations (UU HPP) and Law No. 42 of 2009 (VAT Law), where financial services are exempted from VAT collection.
  • Enforcing tax implementation for unregistered exchanges in Indonesia, as regulated in the Minister of Finance Regulation (PMK) Number 68 of 2022, with a VAT rate of 0.22% and Income Tax (PPh) of 0.2%. This aims to encourage domestic customers to transact on registered exchanges.

Apart from Taxes, How to Encourage the Increased Crypto Transactions?
Bappebti also highlighted their views and solutions regarding the decline in crypto asset transaction volume due to implementing the crypto asset tax. In response, Bappebti will coordinate with the Directorate General of Taxes (DJP) to implement equal treatment in the tax collection for customers who transact on unregistered exchanges.

Not only that, Bappebti said that other initiatives are being pursued to encourage an increase in crypto transactions, such as the establishment of Self-Regulatory Organizations and expanding the services offered by exchanges, such as staking, the development of crypto assets in the form of futures products, evaluate and improve the regulations related to crypto assets, including simplifying the Analytical Hierarchy Process (AHP) method for selecting crypto assets that can be traded in Indonesia. This aims to stimulate an increase in the quantity of types of crypto assets that can be traded without reducing current assessment standards. Kasan, Acting Head of Bappebti, emphasized, “With a more varied selection of crypto asset options, it is hoped to boost public interest.”

The Association has also initiated many discussion forums between business actors and the government, to ensure that the implemented regulations can support the needs and development of the industry. The topics revolve around consumer protection and the competitiveness of domestic business actors. For the initiative, Mobee’s COO & CFO, Methodius Anwir, hopes policymakers can prioritize global insight in drafting regulations to create a competitive industry. This way, all parties can share the same vision in overcoming challenges and creating new opportunities for the sustainable growth of the crypto asset industry.

SOURCE Asosiasi Blockchain Indonesia

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Digital Currency Initiative Launches in Taiwan by Collaborating with Prestigious University

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In an innovative effort to revolutionize digital financial education, a prominent digital currency provider has teamed up with a renowned university in Taiwan. This strategic collaboration aims to equip students with advanced knowledge and practical experience, preparing them for the future of finance.

Empowering Future Financial Professional

The partnership focuses on immersing students in the complex world of digital assets, blockchain technology, and cutting-edge financial instruments. Industry experts will offer invaluable insights and mentorship, enhancing students’ understanding and skills in this rapidly evolving field.

Curriculum Highlights:

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  • Blockchain Principles: Foundational knowledge of blockchain technology.
  • Critical Thinking: Developing analytical skills for problem-solving in digital finance.
  • Risk Assessment: Strategies for identifying and managing financial risks.
  • Legal Compliance: Understanding the regulatory landscape and compliance requirements.
  • Career Insights: Exploring potential career paths in the digital finance industry.

Commitment to Digital Economy Growth

This initiative underscores a commitment to fostering the digital economy’s growth by highlighting the stability of digital assets against traditional currencies. The newly introduced digital token combines traditional asset stability with blockchain security, offering a robust financial instrument for the future.

The digital currency provider has a long-standing history of promoting blockchain education and advocating for financial inclusivity. By facilitating cross-border transactions and investing in emerging markets, the organization continues to play a crucial role in shaping digital finance’s future.

Advancing Financial Literacy and Inclusivity

This collaborative effort represents a significant step towards democratizing financial literacy and empowering individuals worldwide to engage with the evolving digital currency landscape.

Additional Facts:

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  • Taiwan’s Blockchain Hub: Taiwan actively promotes itself as a hub for blockchain and digital currency innovation through various initiatives.
  • Research and Development: The partnership is expected to spur increased R&D activities in digital assets, benefiting both academia and industry.
  • Regulatory Exploration: Taiwan’s government is interested in exploring regulatory frameworks for digital currencies and blockchain technology, creating a supportive environment for such collaborations.

Key Questions Addressed

  1. Impact on Adoption: How will the collaboration between the digital currency provider and the university impact the adoption of digital currencies in Taiwan?
  2. Skills and Knowledge: What specific skills and knowledge will students gain from the curriculum focusing on blockchain technology and digital assets?
  3. Regulatory Compliance: How does the initiative address potential regulatory challenges and compliance issues in the digital currency space?

Advantages and Disadvantages

Advantages:

  • Enhanced Education: Offering students unique educational opportunities in digital finance and blockchain technology.
  • Industry-Academia Bridge: Providing hands-on experience and mentorship to bridge the gap between academia and industry.
  • Economic Growth: Contributing to the growth and development of the digital economy in Taiwan and beyond.

Disadvantages:

  • Curriculum Updates: Potential challenges in keeping the curriculum up-to-date with the rapidly evolving digital currency landscape.
  • Practical Exposure: Ensuring students receive practical, real-world experience to complement theoretical knowledge.
  • Regulatory Balance: Balancing the promotion of digital currencies with the need for regulatory compliance and risk management.

The collaboration between the digital currency provider and the Taiwanese university marks a significant milestone in digital financial education. By integrating industry expertise with academic rigor, this partnership aims to nurture the next generation of financial professionals and foster the growth of the digital economy.

Source: smartphonemagazine.com

The post Digital Currency Initiative Launches in Taiwan by Collaborating with Prestigious University appeared first on HIPTHER Alerts.

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Binance Appeals Against $4.3M Penalty Imposed by Canada Regulator

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In a recent court appeal, Binance argued that it does not specifically target Canadian customers, claiming its activity in Canada is merely a byproduct of its international operations, according to a June 19 report by the Canadian Press. The exchange revealed that although it had previously attempted to establish a Canadian presence, these plans were abandoned. By May 2023, Binance had fully exited the Canadian market, citing new regulations on stablecoins and investor restrictions that made continued operations unfeasible. Despite its departure, Binance acknowledged the sentimental value of Canada, being the home country of its founder.

In May, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) imposed a $4.3 million fine on Binance for non-compliance with anti-money laundering (AML) and terrorist financing rules. FINTRAC claimed that between June 2021 and July 2023, Binance failed to report over 5,000 transactions of $10,000 or more. Additionally, despite having multiple opportunities, Binance failed to register as a money services business within the deadlines set by the regulator.

Beyond its issues in Canada, Binance is facing a multitude of legal challenges globally. In April, a class-action lawsuit was filed against the exchange in Canada, accusing it of violating securities laws. The plaintiffs allege that Binance sold crypto derivative products to everyday investors without proper registration, breaching Ontario’s Securities Act and federal regulations. This lawsuit, representing tens of thousands of Canadian investors, seeks compensation and the reversal of unauthorized trades.

Globally, Binance has also faced significant financial penalties. In November, the exchange settled with US authorities, agreeing to a $4 billion fine for violations of anti-money laundering and sanctions laws. Similarly, the Indian Financial Intelligence Unit imposed a $2.24 million fine, the largest ever against a crypto entity in the country, for failing to comply with AML regulations.

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Binance’s regulatory and legal troubles illustrate the significant challenges faced by cryptocurrency exchanges operating across multiple jurisdictions. While the exchange continues to navigate these complexities, its ability to comply with global regulatory standards and address legal disputes will be critical to its long-term viability and reputation in the market.

Source: cryptonews.com

The post Binance Appeals Against $4.3M Penalty Imposed by Canada Regulator appeared first on HIPTHER Alerts.

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Binance.US Dealt Another Blow: North Dakota Revokes License

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Following the lead of states like Florida, Alaska, Oregon, Maine, and North Carolina, North Dakota has moved to block Binance.US from regaining its money transmitter license. This decision by the North Dakota Department of Financial Institutions (DFI) is grounded in a November 2023 guilty plea by Binance founder Changpeng Zhao on anti-money laundering charges, further questioning the exchange’s suitability for operation.

Protecting Public Interest

DFI Commissioner Lise Kruse emphasized the need to protect the public interest in her statement: “The Commissioner finds the Respondent does not continue to meet the qualifications or satisfy requirements that may apply to an applicant for a new money transmitter license.” This decision adds North Dakota to the growing list of states placing Binance.US in regulatory “penalty boxes.”

Global Troubles and US Regulatory Concerns

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The regulatory issues faced by Binance.US in the United States reflect broader global challenges. For instance, a recent regulatory conflict in Nigeria, which resulted in the detention of a Binance executive, raises additional concerns for US regulators, complicating Binance.US’s situation further.

Impact and Outlook for Binance.US

Currently, Binance.US is unable to onboard new users in several regions and is entirely inaccessible in over 10 states. The exchange has until July 17, 2024, to challenge North Dakota’s decision. However, the outlook remains uncertain, given the mounting restrictions and regulatory pressures.

The relatively short prison sentence for Zhao might suggest a potential course correction within Binance. By prioritizing user safety and adhering strictly to US regulations, Binance.US could potentially regain some lost ground. The exchange’s future hinges on its ability to address regulatory compliance issues effectively.

The Broader Implications

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This regulatory crackdown highlights the evolving landscape of cryptocurrency regulation. While the innovative potential of cryptocurrencies is significant, exchanges must operate within established regulatory frameworks to maintain trust and stability in the market. Binance.US’s struggle will be closely watched by the entire cryptocurrency industry, serving as a cautionary tale for exchanges that prioritize growth over compliance.

Source: bitcoinist.com

The post Binance.US Dealt Another Blow: North Dakota Revokes License appeared first on HIPTHER Alerts.

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