- Indonesian crypto exchanges report a 60% decline in trading volumes for 2023, attributing the drop to the country’s high income and VAT taxes on cryptocurrency transactions.
- Industry leaders suggest that reclassifying cryptocurrencies as securities could reduce the tax burden and potentially revive the market.
Taxation Challenges in the Crypto Sphere
In an unexpected downturn for one of the world’s quickest to embrace cryptocurrency, Indonesia’s digital asset exchanges have recorded a steep 60% decrease in transaction volume in 2023. This slump has raised concerns within the local crypto sector, with many pointing to the stringent tax regime as a key factor in driving traders away.
The Impact of Taxation on Trade
Indonesia currently categorizes cryptocurrencies as commodities, thereby levying both income tax and value-added tax (VAT) on transactions, a policy that exchange leaders believe is stifling market activity. Oscar Darmawan, CEO of INDODAX, Indonesia’s prominent crypto exchange, highlights that the combined tax rates surpass the transaction fees imposed by the exchanges themselves, posing a considerable financial strain on traders and the industry as a whole.
Calls for Regulatory Reclassification
Amidst the downturn, there is a push from industry executives to reclassify cryptocurrencies as securities to align them with the tax treatment of stocks. Such a move, they argue, could ease the tax burden on users and exchanges, fostering a more equitable and consistent investment landscape. Yudhono Rawis, CEO of exchange platform Tokocrypto, champions this perspective, emphasizing the similarities between crypto assets and traditional tradable securities.
Anticipating Regulatory Shifts
The anticipated transfer of crypto oversight in January 2025 from Indonesia’s commodities regulator to the Financial Services Authority (OJK) presents a beacon of hope for the industry. Exchanges like Reku, Tokocrypto, and INDODAX are optimistic that the VAT tax may be abolished with the oversight change, potentially leading to a reclassification of crypto as securities.
As the industry navigates these turbulent times, the question remains how local exchanges will adapt to further fluctuations in volume. The imminent oversight shift to the OJK could mark a turning point for Indonesia’s crypto landscape, potentially setting the stage for a resurgence in trading activity if the tax pressures are alleviated. Industry stakeholders are keenly awaiting regulatory updates, hoping for a revival of Indonesia’s once-thriving crypto market.