According to compiled data, in 2023, the cumulative transaction volume produced by native crypto exchanges in Indonesia fell by 60% compared to the previous year. Local crypto exchanges attribute this decline in volume to the taxes applied due to the classification of cryptocurrencies as commodities, including income and VAT taxes. Local crypto exchanges predict that reclassifying cryptocurrencies as securities would lighten the tax burden and bring users back to the platforms.
The Classification of Cryptocurrencies as Commodities Hits Exchanges Hard
Indonesia, one of the fastest countries to adopt cryptocurrencies, saw a significant 60% drop in the cumulative transaction volume of local crypto exchanges in 2023 compared to the previous year, and the industry believes that the excessive tax burden is driving investors away from the sector.
Currently in Indonesia, cryptocurrencies are classified as commodities and are subject to both income tax and value-added tax (VAT). The country’s leading crypto exchanges point out that the total taxes paid for each transaction exceed the transaction fees charged by the exchanges. According to industry representatives, the heavy tax and transaction fee burden is deterring them from investing in cryptocurrencies.
For example, according to Oscar Darmawan, CEO of the Indonesian local crypto exchange INDODAX, investors are charged 0.1% income tax and 0.11% VAT for each crypto transaction. Exchanges are also required to pay a fee of 0.04% to newly established national crypto exchanges. In an interview with CoinDesk Indonesia, Darmawan said, “This situation creates a significant financial burden on the local crypto industry.”
Some local crypto exchange representatives argue that if cryptocurrencies in the country were classified as securities instead of commodities, the tax burden on users would be reduced, and investors would return to the sector.
Yudhono Rawis, CEO of the local crypto exchange Tokocrypto, told CoinDesk Indonesia, “Both stocks and cryptocurrencies are assets with profit potential that can be bought and sold. Therefore, applying the same tax regime for these two investment tools would be fairer and more consistent,” he said.
Cryptocurrencies to be Reclassified from Commodities by 2025
On the other hand, steps have been taken in Indonesia to reclassify cryptocurrencies as securities instead of commodities. The supervision and regulation of cryptocurrencies in the country will be transferred from the commodity regulator to the Financial Services Authority (OJK) in January 2025. Following this transfer, cryptocurrencies are expected to be removed from the commodity class and included in the securities class.
Leading local crypto exchanges in Indonesia, such as Reku, Tokocrypto, and INDODAX, agree that the transfer of supervision and regulation to OJK and the potential classification of cryptocurrencies as securities will eliminate the VAT tax burden.
