The Commodity Futures Trading Supervisory Agency (Badan Pengawas Berjangka Komoditi or BAPPEBTI) has issued Regulation No. 8 of 2021 on the Guidelines for the Organization of the Physical Market Trading of Crypto-Assets through the Futures Exchange (“Regulation No. 8/2021”). In this article we will only provide explanation on the trading mechanism of crypto assets under Regulation No. 8/2021.
1. Opening of Accounts
Under Article 25 of Regulation No. 8/2021, prospective traders or physical trades of crypto assets must draw up crypto assets customer agreements prior to being able to receive any funds or crypto assets owned by crypto assets customers for any trading through the crypto asset physical market. The agreements have to address some elements, at least:
- Company profile;
- Statement of risks, which at the least must contain information on risks relating to price fluctuations, system failures and other related risks; and
- Trading rules documents.
Those documents above shall be sent to the crypto asset customers through email and the crypto assets customers must give its approval prior to the placement of fund.
In order to become customer, individuals must meet the following requirements:
- Must be at least 17 years old;
- Must have Citizen’s Identity Card (KTP) or passports and identity card issued by countries of origin of the customer or limited stay permit card (KITAS) for foreign nationals; and
- Must use their own funds or crypto assets and must ensure that the relevant funds or crypto assets do not belong to other persons or originate from other persons, crimes, money laundering activities, terrorism funding and/or weapon of mass destruction.
Furthermore, under Article 26 of Regulation No. 8/2021, if the prospective traders or physical trades of crypto assets receive a customer which is in the form of legal arrangement, the prospective traders or physical trades of crypto assets has to conduct Customer Due Diligence (CDD) to the beneficial owners, fund owners and/or organizers.
In accepting prospective Customers, the prospective traders or physical trades of crypto assets must implement the know-your-customer principles and must also implement CDD or enhanced due-diligence processes in order to ensure the accuracy and completeness of the customer data provided and their profiles.
2. Placement of Funds and Crypto Assets
Customers who trade crypto assets through prospective traders or traders are required to:
- Place funds into separate accounts in the name of the relevant prospective traders or traders in the interests of the Futures Clearing Agency. The funds should be placed in Rupiah and carried out through (i) book entry between bank accounts, which may involve the use of virtual accounts opened by the prospective traders or traders; (ii) electronic money; or (ii) payment gateway services.
- Place crypto assets into wallets to store said crypto assets (Wallets) under the name of prospective traders or traders in accordance with the travel rule principles (as described in the Regulation No. 8/2021. Placements are carried out through transfers between: (I) Wallets that may either be owned by the customers or not; and (ii) Wallets of prospective traders or traders.
3. Crypto Asset Transaction
Customers can only engage in transactions if they have sufficient funds and/or crypto assets balances. Therefore, prospective traders of traders are prohibited from facilitating any transactions if the relevant funds and/or crypto assets balances are insufficient
4. Withdrawals of Crypto Assets and Funds
Customer may withdraw any funds or crypto assets if (i) the customers have settled all financial obligations with the Futures Clearing House; and (ii) the relevant withdrawal request has been verified by the Futures Clearing House.
The withdrawal of funds should be carried out in Rupiah.
In addition, the customers may withdraw their crypto assets from the traders if the verification results reveal the following: (i) the withdrawal requests confirm to the balances or records of crypto assets ownership; and (ii) the identities of the withdrawers or recipients or recipients’ Wallet and customers are the same, as proved through customers’ accounts opening apps with the relevant traders.
