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Indonesian Crypto Exchanges Blame Dramatic Drop in Trading Volumes Partly on High Taxes
Indonesian crypto exchanges saw a 60% drop in trading volumes in 2023, challenging its reputation as a fast adopter of digital assets.
Updated Mar 9, 2024, 1:47 a.m. Published Jan 17, 2024, 9:23 a.m.
- In 2023, Indonesia's crypto exchanges saw transaction volume drop by 60% from the previous year.
- Local exchanges blame the drop partly on income and VAT taxes, which apply to crypto in the country as they are treated as commodities.
- Recasting crypto as securities may eliminate some of the tax burden and bring users back, local exchanges hope.
Indonesia, one of the world's fastest adopters of crypto, saw a dramatic 60% slump in transaction volume on exchanges in 2023 compared to the previous year – and the industry says high taxes may be one factor driving traders away.
In Indonesia, crypto assets are treated as commodities and are subject to income tax as well as value-added tax (VAT). Leading crypto exchanges in Indonesia say that the sum of total taxes paid on each transaction can exceed trading fees charged by exchanges for transactions. The industry fears that the heavy burden of taxes and trading fees on traders could be discouraging them from buying crypto.
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For instance, crypto users bear an income tax of 0.1% and VAT of 0.11% of every crypto transaction, according to Oscar Darmawan, chief executive officer at crypto exchange INDODAX. Exchanges have to also pay a 0.04% fee to the newly established national crypto bourse, he added.
“This places a significant financial burden on the domestic crypto industry,” Darmawan told CoinDesk Indonesia during an interview.
A two-fold solution
Some in the local crypto industry argue that treating crypto as securities instead of commodities would eliminate some tax burden on users.
"Both stocks and crypto are tradable assets with profit potential … Thus, implementing the same tax regime for both these investment instruments would be more equitable and consistent,” Yudhono Rawis, CEO of exchange platform Tokocrypto told CoinDesk Indonesia.
But that change up is already expected. Crypto oversight in Indonesia will in January 2025 transfer from the country’s commodities regulator to the Financial Services Authority (OJK).
Reku, Tokocrypto and INDODAX, considered as top exchanges in Indonesia, all agree the VAT tax could be removed once oversight shifts to OJK and crypto is potentially classified as securities.
Until then, it’s unclear how local exchanges will weather further drops in volume.
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