Bitcoin Investment Security And Legality In Indonesia

buying and selling investments in Bitcoin legal and safe in Indonesia? Could yes, could not. There are many perspectives on this crypto asset trading.

By regulation, buying and selling Bitcoin and investing in Cryptocurrencies is legal in Indonesia according to the Bappepti Regulation. Legality and legal certainty are shown by the issuance of regulations that officially regulate Bitcoin and crypto trading by the Minister of Trade and CoFTRA.

Meanwhile, the security of investing in Bitcoin Cryptocurrency must be reviewed from various perspectives.

The first question that we must both clarify and answer is what is meant by ‘safe’. This is important so that we have the same perception about Bitcoin investment instruments .

Definition of Safe in Bitcoin

Safe in terms of investment, in general, can have two meanings, namely:

1. Legal

Legal means that the instrument is officially accepted in Indonesia. It is not prohibited to be used as an investment tool.

Usually if it is legal then there is an authority that supervises it. The regulations also already exist, so the signs are clear.

With clear regulations, investors do not have to worry that this instrument will be closed by the regulator.

2. Market Value

In contrast to legality, market value refers to whether Bitcoin has a high investment risk.

This has to do with the security of investment returns.

Can Bitcoin price drop drastically and wipe out profits in no time.

It can happen, a legal instrument but has a high risk as an investment instrument.

Stocks and P2P Lending are types of instruments that are legal but have high risks.

Let’s look at the security aspects of Bitcoin from these two glasses – legality and market value.

Bitcoin Crypto Legality Regulations

Crypto asset trading has been allowed in Indonesia, regulated by CoFTRA – the commodity futures trading supervisory agency.

Buying and selling cryptocurrencies, such as Bitcoin, is legal.

Didn’t the government announce that Bitcoin is illegal?

What is not or has not been allowed in Indonesia is to use Bitcoin as a means of payment transactions. In Indonesia people cannot buy anything and pay with Bitcoin.

The existence of legal certainty regarding the permissible trading of Bitcoin in Indonesia makes investments in these crypto assets protected. Many companies that are officially regulated offer services for investing in crypto assets.

Legal certainty regarding the permission to buy and sell Bitcoin assets is the issuance of regulations governing this matter by the Minister of Trade and CoFTRA.

Cryptocurrency regulations in Indonesia are under the supervision of the Commodity Futures Trading Regulatory Agency (BAPPEBTI).

A. Bitcoin Regulations in Indonesia

The rules for buying and selling bitcoin as a commodity are contained in:

Regulation of the Minister of Trade Number 99 of 2018 concerning General Policies for the Implementation of Crypto Asset Futures Trading and
Regulation of the Commodity Futures Trading Supervisory Agency Number 5 of 2019 concerning Technical Provisions for the Implementation of the Physical Crypto Asset Market on the Futures Exchange. This rule was signed on February 8, 2019.

In accordance with the CoFTRA regulations, buying and selling Bitcoin and other digital currencies is legal in Indonesia. People can trade through crypto asset traders.

Bitcoin and other crypto assets are also closely monitored by Bank Indonesia and the OJK, which prohibits Bitcoin and other digital currencies as a form of payment because they do not originate in the financial industry.

An important part of the CoFTRA Regulations is the issue of exchanges, places where investors currently sell, buy, store (rupiah or coins) and transfer crypto assets. Exchange security and regulation is very important for investors.

Under CoFTRA regulations, crypto asset traders are Bitcoin exchanges, which are currently used by investors to buy and sell crypto assets.

B. Terms of Exchange

CoFTRA’s regulations stipulate that:

First , a Physical Crypto Asset Trader is a party that has obtained approval from the Head of CoFTRA to conduct Crypto Asset transactions either on their own behalf, and/or facilitate Crypto Asset Customer transactions.

Second , the exchange must apply for registration with CoFTRA as a “Prospective Physical Crypto Asset Trader”, by fulfilling the following conditions:

paid up initial capital of Rp 100 billion
maintain a final capital balance of Rp 80 billion.
provide the necessary documents ,
provide system access to BAPPEBTI (read only), as well as
submit periodic reports on the implementation of crypto asset trading.

CoFTRA has issued registration marks to 13 companies as “Prospective Crypto Asset Physical Traders”. It is recommended that crypto asset transactions in Indonesia be carried out only at these 13 regulated companies.

Third , CoFTRA gives a maximum time of 1 year from the time the registration certificate is given to each “Prospective Crypto Asset Physical Trader” company to become a “Crypto Asset Physical Trader”, by fulfilling a number of requirements.

One of the requirements to become a “Physical Crypto Asset Trader” is that the capital must increase to IDR 1 Trillion from the previous IDR 100 Billion. There was a 10x increase in capital.

Fourth , if within 1 year, the “Prospective Crypto Asset Physical Trader” fails to comply with the provisions of CoFTRA, the failed company must be dissolved and its assets transferred to another company.

The following is an excerpt from the CoFTRA Regulation that “Prospective Crypto Asset Physical Traders whose registration is canceled must:

transfer the Crypto Asset Customers, funds, and Crypto Assets belonging to the Crypto Asset Customers to prospective Crypto Asset Physical Traders who have obtained registration marks or Crypto Asset Physical Traders who have obtained approval; or
return funds and/or hand over the Crypto Assets belonging to the Crypto Asset Customers that it manages, and are prohibited from accepting new Crypto Asset Customers.”

From this CoFTRA regulation, investors can see that currently all registered crypto asset traders are still ‘Prospective Traders’ status. It remains to be seen in another year, whether these companies can qualify to become ‘Crypto Asset Traders’.

Safe or not, investment risk

The risk of investing in Bitcoin is, obviously, very high.

This can be seen from the high increase in the price of Bitcoin. In the past year alone, the price of Bitcoin has gone up by more than 700% in a year.

Remember: high risk high return !

The picture can be seen in the two graphs below.

In a span of 1 year (2020 – early 2021), the price shows an increasing upward trend without breaking. The increase reached more than 700%.

However, if we zoom – in, the price of Bitcoin is in the last 1 month (March – April 2021), then the fluctuation is very high, as shown in the chart below.

Even though it is growing rapidly, a number of challenges can hinder Bitcoin adoption, namely:

A. Processing Transactions

Blockchain’s ability to process Bitcoin transactions is still very low. Currently, Blockchain can only process 7 transactions per second, while Visa is capable of processing 1,700 transactions per second.

This very wide difference in the ability to process transactions calls into question the scalability and performance of Bitcoin as digital money.

B. High Fluctuation

The highly volatile value of Bitcoin against Fiat currencies, such as Rupiah, USD makes it difficult as a currency. Currency needs stability.

The absence of clear regulations, coupled with the relatively small market size compared to the capital market or commodity market, makes the Bitcoin investment market vulnerable to speculation and manipulation by certain parties.

A recent study reveals that manipulation has taken place that caused the price of Bitcoin to skyrocket at the end of 2017, particularly with regard to the issuance of Tether (USDT), a digital currency pegged to 1 USD, which was used to buy up Bitcoin and is thought to have pumped up the price.

C. Money Laundering

Bitcoin’s anonymous nature – it is impossible to know who owns it – is difficult to track and identify, making it less favored by regulators.

Meanwhile, it is very important for regulators to buy-in if Bitcoin is to become mainstream in the world’s financial system.

D. Mining Bitcoin

Processing Bitcoin transactions, which is also called mining, to decode on the Blockchain, requires a very high consumption of electricity with the capabilities of a large computer processor.

A recent study says the global Bitcoin network electricity consumption is estimated to have matched the electricity consumption in Ireland for a year!

How to Safely Invest Bitcoin Cryptocurrency

Is investing in Bitcoin safe?

From the description above, we can draw the conclusion that according to regulations in Indonesia, Bitcoin is legal. Bitcoin can be traded as an investment tool and is regulated by CoFTRA.

Bitcoin is not a fraudulent investment. This is a legitimate and legal investment in Indonesia. The regulations are clear.

However, Bitcoin security in terms of market value must be observed carefully. Bitcoin is a type of investment that has a very high risk.

The way to deal with the investment risk is to:

A. Portfolio Diversification

Portfolio diversification is a step that must be taken. This has become a benchmark that you should not put all your money in one instrument, especially one with a very high risk.

Bitcoin is very attractive as an investment instrument. High returns, very liquid, easy to trade and very popular.

However, the risk is also very high. Bitcoin price fluctuations can be quite extreme.

The form of our caution is not to put all the money in Bitcoin. Put as much as we can afford to lose.

In other words, put ‘cold money’ in Bitcoin. Be prepared to lose this money.

B. Exchange Diversification

Buying and selling crypto assets is not one exchange, but in several to ensure that if one has a problem, there are still other exchanges.

Moreover, when the Bitcoin owned is stored in the wallet belonging to the Exchange. We have to be really sure about the exchange’s wallet security system.

The number of exchange cases that have been conceded reminds us that although there have been many actions to maintain the security of the exchange from hacker attacks, there are still cases of burglary. The list of exchanges that have conceded is endless, from 2011 to 2020, something happened.

One way to overcome this is to invest Bitcoin in several exchanges. Not pegged to just one exchange.

C. Understand

Learn well about cryptocurrencies, especially about how it works and the risks that may arise. By understanding it well, we can measure whether this instrument is in accordance with our risk appetite or not.

One of them, which is important is the matter of wallet security. The place where the owner keeps the bitcoins.

What kind of wallet is good for our needs. It needs to be studied and decided which type of wallet to use.

D. Officially Registered

Use an exchange that already has a registered mark from CoFTRA. Those listed are clearly the companies, have sufficient capital and have been strictly selected.

Indeed, there are some of the largest Bitcoin exchanges in the world that are not registered with CoFTRA. It is possible for these foreign exchanges to be chosen, but it must be ensured that they have clear regulatory permits.

E. Save Data OK – OK

The owner will store the bitcoin in the wallet robot tranding binance, either in the exchange or in his own wallet. In the wallet, a private key will be stored to unlock Bitcoin, without which Bitcoin is useless.

The problem arises when people forget the password to enter the wallet. This usually happens when people keep their own wallets (not on exchanges), which is mostly done when the value of bitcoins is large, where people want to keep their own wallets because they are considered safer.

People store bitcoins on USBs that are not connected to the internet, so they can’t be hacked. However, this will be useless, if the USB password is forgotten.

Make sure to store passwords or access as well as possible. Not only so that other people don’t hack it, but so you don’t forget the combination.

Many cases, private – key is not lost, very safe, but the owner forgets the combination. It’s like having a safe to store valuables, which the safe combination lock is forgotten, so it can’t be opened.


Hopefully this article can answer whether or not investing in Bitcoin is safe. Hope it is useful!