The state earns well from cryptos
For quite some time now, there have been efforts in more and more countries regarding crypto regulations. The main arguments put forward are the high energy consumption in mining, investor protection and more security thanks to control. Whether state control necessarily brings more security may be doubted in view of eloquent examples from the banking sector to airlines – the fact is that billions of taxpayers’ money (if you like, deposited assets of the citizens) have been and are being spent on rescuing state-affiliated companies.
We want our piece of the pie
A far more plausible approach is that the state simply wants its piece of the pie. Control yes, investor protection OK, but isn’t it really about tax revenues? Indonesia proves that this is the case and that it doesn’t have to be a bad thing: The Asian island state will levy a tax of 0.1 percent on the purchase of crypto assets from May 2022. In addition, it takes another 0.1 percent from transactions, earnings and capital gains.
The amount makes the difference
0.1 percent is a barely significant percentage that is unlikely to bother market participants, but it adds more than $6 million to the Indonesian government’s coffers each month. This was revealed by Yon Arsal, the Indonesian government’s special representative for tax compliance, during a recent retail conference. Judging by the short time this tax has only been collected and the development potential of the industry, there is still a lot of room for improvement.
In addition, Indonesia is planning to set up its own exchange for cyberdevices. This is intended to increase tax revenue, on the one hand, and to take advantage of the rising popularity of cryptocurrencies, on the other hand, and to increase the level of control in addition to revenue. The Indonesian supervisory authority puts the trading volume of the previous year at just under 60 billion US dollars, which represents a tenfold increase compared to the year before. However, the project for a separate crypto exchange, which was announced for 2021, will not be finalized until the end of 2022, as there have been several delays due to the complexity of the matter.
Private involvement in the crypto market
In addition to the state side, however, private competitors are not sleeping either, and Indonesian FinTech GoTo recently acquired local crypto exchange PT Kripto Maksima Koin for just under $8.4 million. All in all, Indonesia is an exciting growth market that is worth watching and can show what acceptable state participation in the crypto market can look like.