“Indonesian Commodity Futures Trading Regulatory Agency (Bappebti) issued Bappebti Regulation No. 9 of 2019 (“PerBappebti 9/2019”) in July 2019 to amend Bappebti Regulation No. 5 of 2019 (“PerBappebti 5/2019. The regulation changed most of the capital requirement, the requirement, controlling party, and the possibility of becoming a crypto asset physical trader applicant instead of directly becoming a licensed crypto-asset physical trader.”
Back in February 2019, Indonesian Commodity Futures Trading Regulatory Agency (Bappebti) issued Bappebti Regulation No. 5 of 2019 (“PerBappebti 5/2019”) on Technical Provisions on Implementation of Crypto Asset Physical Market in Futures Exchange. This regulation was among the first regulations to regulate crypto asset trading in the futures exchange. Just a few months afterwards, in July 2019, Bappebti issued an amendment of this regulation in the form of Bappebti Regulation No. 9 of 2019 (“PerBappebti 9/2019”). This new regulation relaxed most of the capital requirements in PerBappebti 5/2019 but also tighten other requirements.
Lower Capital Requirement
By PerBappebti 5/2019, Bappebti set a quite high minimum capital requirement for crypto asset exchange, clearing house, physical trader (broker), and storage manager (wallet service). Furthermore, Bappebpti also stipulates an obligation to maintain a specific amount of final capital balance. With the issuance of PerBappebti 9/2019, this capital requirement has been decreased up to 95% of the original. Similarly, the required amount of maintained final capital balance has also been changed. However, the term used now is “equity” instead of final capital balance. The changes are as follows:
More Strict Requirement
While the capital requirement is more relaxed in PerBappebti 9/2019, other requirements are now stricter. The system used by the parties, whether it is for exchange, clearing, trading, or wallet service must be audited by Certified Information System Auditor (CISA). For crypto asset physical trader in specific, it is now required to have at least one person which passes Bappebti fit and proper test. The said personnel can either be a director, commissioner, shareholder, or even beneficial owner. It is also required for a physical trader to maintain 2:1 debt to equity ratio. Furthermore, the physical trader is now only allowed to keep the maximum of 50% of their crypto assets in their own storage, the rest must be stored in wallet service provider which they have an agreement with. The crypto assets that are stored in their own storage can be either in cold (offline) storage or hot (online) storage, however, the maximum number of crypto assets allowed to be stored in their own hot storage is only 30%.
For crypto asset storage manager in specific, it is now required to have both cold and hot storage instead of just cold storage. It is also required to ensure the entire stored crypto assets. For this purpose, wallet service is required to have a cooperation agreement with an insurance company which covers crypto asset. The said cooperation agreement must also be reported to and approved by Bappebti.
PerBappebti 9/2019 puts special emphasis on the controller of the crypto asset physical trader and storage manager. According to this regulation, the controlling party in these companies could be the majority shareholder, beneficial owner, Directors, Board of Commissioners, the Company’s executives, or even other parties which fulfils either of these following criteria:
1. Own at least 20% of shares in the company, either individually or collectively;
2. Directly or indirectly manage the Company or affects the Company’s policy;
3. Own stock option or another similar right which could lead to ownership of at least 20% of the company shares, either individually or collectively; or
4. Has the right to appoint, approve, or dismiss members of the Board of Directors or Board of Commissioners and/or other ways of controlling the Company.
These so-called controlling parties will also be held responsible in the event there is an infringement or loss due to infringement or fault in management from the physical trader or storage manager.
Crypto Asset Physical Trader (Applicant)
Similar to PerBappebti 5/2019, the new PerBappebti 9/2019 still offers the possibility of becoming a crypto asset physical trader applicant instead of directly becoming a licensed crypto-asset physical trader. This option was offered in the old regulation to accommodate people who can’t comply with the minimum capital requirement of licensed crypto-asset physical trader. Instead, they can apply as crypto asset physical trader applicant with the lower capital requirement, but only for a limited period, which is a year after the issuance of the regulation. Thus, according to the old regulation which was issued back in February 2019, the time limit in becoming a crypto asset physical trader applicant will only last until February 2020. However, the new regulation not only reduced the capital requirement even lower; it also refreshes the time limit to July 2020. However, there is still no further information on whether Bappebti would refresh the time limit again or not in the future.
Author: Benedictus Giovanni
Gaffar & Co., Indonesian Boutique Law Firm which specializing and focus on commercial law areas e.g. Investment Regulatory.
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