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?
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 Exchanges under Bappebti
Unregistered under Bappebti
Total commission per transaction
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.
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
The post Crypto Asset Tax: Competitiveness and Industrial Growth in Indonesia appeared first on Hipther Alerts.
Gamifying the Online Casino Experience with NFTs
Australian online gambling operators are utilizing gamification strategies to enhance player experience, incorporating features like progress bars, NFTs, VIP programs, and PvP tournaments, despite concerns about addiction and legality.
Online gambling operators in Australia are increasingly using gamification strategies to tap into people’s natural desire for status, achievement, and competition. Features like progress bars, points, and tiered levels give players a sense of advancement as they continue wagering. Fun mini-games and quests add variety. Leaderboards foster social competition, while badges and trophies provide recognition.
Powered by non-fungible tokens NFT technology, players can now earn tradable digital rewards with real-world value and scarcity. Winning unique virtual collectibles and assets drives further engagement.
Loyalty Programs Redefined
A core area getting a gamification boost from NFTs is VIP and loyalty programs. Players can now earn tradable loyalty NFTs.
Paris Saint-Germain begins Web3 drive as a new blockchain validator for Chiliz Chain
The French football club aims to explore various avenues in the cryptocurrency sector, starting with becoming an infrastructure provider to Chiliz Chain.
French football giant Paris Saint-Germain (PSG) is set to deepen its Web3 and SportFi involvement by becoming a validator for fan token blockchain Chiliz.
Cointelegraph recently traveled to Paris to speak exclusively to Chiliz founder Alexandre Dreyfus and PSG head of Web3 Pär Helgosson about the evolving partnership between the football club and the blockchain platform.
PSG is the first major football club to become a blockchain protocol validator and is set to reinvest revenue generated as a validator to buy back PSG tokens. The move is touted as a way to create a self-sustaining digital economy for the club and its fan base.
The Chiliz Chain is the infrastructure underpinning Socios, the platform that issues and manages fan tokens for over 150 professional football clubs and sports teams. PSG was an early adopter of the technology and launched its fan token on Chiliz in September 2018.
The club intends to explore opportunities in the broader cryptocurrency, Web3 and SportFi spaces, with Helgosson spearheading the efforts.
Venture capital firm Animoca Brands joined Chiliz Chain as a validator of its proof-of-stake protocol in November 2023 after Chiliz revamped its tokenomics model. Chiliz introduced a new inflation-staking rewards mechanism for CHZ holders and the integration of the transaction fee protocol burning scheme EIP-1559.
PSG gets first shot at token buy-back mechanism
Helgosson told Cointelegraph that PSG will use its accrued revenue as a node validator to carry out PSG fan token buybacks from public marketplaces. The buybacks will be automated and executed by smart contracts through its validator and on decentralized exchanges on the Chiliz Chain.
The program aims to increase revenue from the club’s validator through gas fees and supply inflation that are reinvested into PSG tokens. The club is interested in refreshing its token reserves to create a self-sustaining economy:
“We’re aiming to build a sustainable tokenomics model together where the club, because of our role as a node validator, can use the profits to buy back fan tokens and use them to reinvest back into the fan ecosystem.”
Helgosson says the move is expected to provide rewards, new utilities, functions, products and services that will benefit PSG tokenholders, sponsors and players.
PSG and Chiliz are also planning a blockchain hackathon hosted at the club’s iconic Parc des Princes stadium in the summer. The event aims to attract developers to build decentralized applications and products incorporating PSG tokens on the Chiliz Chain.
An alternative for sports organizations
Dreyfus tells Cointelegraph that PSG’s move to become a validator could be a catalyst for other clubs to follow suit and better understand how the ecosystem’s tokenomics work.
“As for the drawcard, PSG is going to play an active role in the operations of the Chiliz ecosystem, meaning they will help build trust and attract more brands and developers, also by co-hosting hackathons with us at their stadium,” Dreyfus explained.
Chiliz and Socios have been focused on building products and experiences for the broader sports industry. Dreyfus believes that its protocol needs stakeholders from the space to participate in its governance and ongoing operation.
The Chiliz founder says his long-term goal is to have dozens to hundreds of validators comprised of sports organizations, fan-owned nodes and cryptocurrency firms. The hope is that PSG’s move will prompt other major clubs to consider becoming node operators.
“This is a new income source for them, diversification, but also being part of the network effect brings value to everybody involved.”
PSG’s Web3 play
Off-the-record conversations with Helgosson reveal that PSG is ambitiously exploring a multitude of ways to diversify revenues and offerings in the cryptocurrency and blockchain ecosystem.
The club’s investment in becoming an infrastructure operator of Chiliz blockchain marks the start of its moves to actively participate in the Web3 ecosystem. PSG has explored and launched several nonfungible token collections, some of which offer exclusive rewards to holders.
Helgosson would not disclose the details of its investment or capital allocation for the Chiliz node-as-a-service partnership but said the club intends to actively engage and reinvest with its Web3 partners.
He highlighted that being a node validator is a core component in building a sustainable tokenomics model for the Paris Saint-Germain Fan Token ecosystem and Chiliz.
The post Paris Saint-Germain begins Web3 drive as a new blockchain validator for Chiliz Chain appeared first on HIPTHER Alerts.
Luxury brand blockchain platform Arianee aims to scale, launches L2 on Polygon
Arianee has launched a Polygon CDK-powered layer 2 to issue and manage digital product passports for various luxury brands and companies.
Luxury brand blockchain infrastructure provider Arianee has developed a new layer 2 built on Polygon to scale its digital product passport platform used by various luxury brands and companies.
Arianee has been developing the optimized layer 2 since early 2023, using Polygon’s zero-knowledge proof (ZK-proof)-powered Chain Development Kit (CDK). Arianee co-founder and CEO Pierre-Nicolas Hurstel spoke to Cointelegraph about its reengineered infrastructure, allowing brands and developers to design highly customizable, cost-effective and performant digital passports and tokens linked to real-world products and assets.
“We exclusively build on EVM [Ethereum Virtual Machine], catering to enterprise and scalable use cases. When striving to deliver a service that operates seamlessly, universally and with predictable costs, it remains hard and risky to build on L1 or even on Polygon mainnet,” Hurstel explains.
The Arianee CEO said the company is focused on supporting brands engaged in scalable, high-performance and evolutive projects, which “demand an environment allowing precise control over efficiency in terms of both costs and energy consumption.”
Arianee’s native protocol token will be used for payments within the Polygon CDK application-specific chain (appchain), which is bridged to the Aria20 ERC-20 token on the Ethereum mainnet. Launching the layer-2 appchain will allow brands to launch and manage their digital product passport and loyalty tokens.
Arianee is currently the infrastructure provider to more than 40 brands, including Breitling, Moncler, Yves Saint Laurent and Lacoste. Luxury watch brands like Breitling issue digital product passports on the protocol to give owners blockchain-based proof of ownership.
These digital passports are nonfungible tokens (NFTs) that provide customizable utility for their real-world counterparts. Owners own and control their data and can interact with manufacturers to organize and manage product repairs, warranties, insurance and other services.
Polygon’s CDK is expected to deliver increased scalability and performance driven by ZK-proof technology. Brands using Ethereum’s ERC-721 token standard to issue NFTs and digital passports can also integrate existing infrastructure to Arianee’s protocol using the Polygon CDK.
Another drawcard of the new layer-2 functionality is the provision of block space dedicated to individual applications on the protocol. This is touted to reduce the impact on user experience as a result of high network activity. Polygon’s scaling infrastructure also reduces the operational costs of applications and services associated with gas fees and smart contract execution.
Polygon released a new Type 1 prover in February, allowing ecosystem chains like optimistic rollups to unlock ZK-proofs’ layer-2 functionality. The open-source technology unlocks the ability to generate ZK-proofs for mainnet Ethereum blocks at near-zero cost.
The post Luxury brand blockchain platform Arianee aims to scale, launches L2 on Polygon appeared first on HIPTHER Alerts.
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