Indonesia’s Futures Regulator Issues New Rules for Crypto Assets


Indonesia’s Futures Exchange Supervisory Board (Bappebti) has announced new regulations on the implementation of physical markets for crypto assets in futures trading. The rules focus on good governance for cryptocurrency tradèrs, legal certainty and consumer protection. They will also require the regulator to establish a physical market for futures trading in virtual currencies.

Also read: Crypto Broker Voyager Digital Lists on Canada’s TSX Venture Exchange

Indonesia Enters Early Phase of Crypto Regulation

Jakarta Post, a local daily, has said Bappebti’s move signals that the Indonesian cryptocurrency industry is now entering the “early phases of regulation” from a government that has hitherto resisted attempts at recognizing crypto as a legitimate financial tool.

According to the article, the new framework will also regulate all tradable crypto assets, including mechanisms for buying and selling, starting from account opening and fund saving as well as withdrawal of cryptocurrencies in both fiat and non-cash terms.

Indonesia’s Futures Regulator Issues New Rules for Crypto Assets

Futures generally refer to financial contracts that compel the buyer to purchase an asset or the seller to sell an asset, in this case cryptocurrency, at a predetermined future date and price. For example, Hong Kong-based Coinflex exchange announced in January that it was planning to offer futures contracts for bitcoin core (BTC), bitcoin cash (BCH), and ethereum (ETH) with leverage of up to 20x beginning next month.

All futures bought and sold on the exchange will be physically delivered, meaning that when the contracts expire, holders will be paid the underlying cryptocurrency instead of cash. Not all futures are physically delivered, but the concept is broadly still the same.  Other exchanges such as Intercontinental Exchange Inc., which owns the New York Stock Exchange, and Chicago-based Eris Exchange have also revealed plans to introduce physically delivered futures for BTC.

‘Minimum Capital Thresholds Too High’

In Indonesia, Bappebti, which operates under the Ministry of Trade, proposed a funding framework for operators of futures exchanges that local industry participants regard as very high. Under Article 24 of the new regulations, a physical trader of crypto assets is required to transfer 100 billion rupiah (about $7.13 million) to their accounts. At least 80 billion rupiah of that amount must be kept as a deposit, Jakarta Post reported.

Indonesia’s Futures Regulator Issues New Rules for Crypto Assets

Another section of the regulations indicates that “to be approved as a facilitator of customers in crypto asset transactions, physical traders are required to transfer one trillion rupiah (about $71.3 million) in capital and keep 800 billion rupiah in their accounts.”

The article quoted an official with the local cryptocurrency exchange who complained that the minimum capital required for physical traders to own in cryptocurrency was “too high.” The official said the industry was looking to discuss the matter with the Futures Exchange Supervisory Body, possibly for a downward review.

However, the Indonesian government, which considers cryptocurrency to be a commodity, has previously expressed concern at the level of risk and theft that sometimes occurs in the cryptosphere. The high minimum capital thresholds might be an attempt to address similar fears.

Dharma Yoga, a senior official with Bappebti, said last year that any regulation of the crypto industry in Indonesia would introduce measures to prevent the loss of funds due to embezzlement or hacking of crypto platforms.

What do you think about the new regulations on cryptocurrency futures in Indonesia? Let us know in the comments section below.

Images courtesy of Shutterstock.

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BTC Futures Volume Plummets Relative to Spot Trade Heading Into 2019


Research carried out by Tradeblock has found the combined trade volume across the futures contracts offered by Chicago Mercantile Exchange (CME) and Chicago Board Options Exchange (CBOE) plummet relative to spot market volume during the second half of 2018.

Also Read: Mt. Gox Creditors Neither Need nor Deserve This Kind of ‘Hero’

BTC Futures Volume Rivals Combined Trade Activity Across Leading Spot Exchanges During Q3 2018

Despite the hype surrounding the launch of CME and CBOE’s BTC futures contracts at the end of 2017, said markets comprised a small fraction of combined trade activity taking place on Coinbase, Itbit, Kraken, Bitstamp, and Gemini.

With the burst of the 2018 bubble, however, spot volume fell by more than 70 percent when comparing January’s trade activity with average monthly volume posted during the second half of 2018.

BTC Futures Volume Plummets Relative to Spot Trade Heading Into 2019

Mixed with a more than doubling in CME futures trade activity, trade volume for CBOE and CME’s BTC futures came to rival that of Coinbase, Itbit, Kraken, BItstamp, and Gemini’s combined spot volume during the third quarter of 2018 – with CME’s volume dwarfing that of each individual exchange.

Futures See Volume Drop-Off During Final Quarter of 2018

While the volume of both the BTC spot and futures markets saw decline during September and October, November saw the combined spot markets post their strongest monthly volume since May, while the futures markets posted their second weakest month of the year.

BTC Futures Volume Plummets Relative to Spot Trade Heading Into 2019

While December saw the spot market post a healthy retracement, trade activity in the futures markets fell by more than half to post its worst performing month since launch, suggesting a shift away from the cryptocurrency derivatives offered by CME and CBOE in favor of the traditional cryptocurrency markets.

On Feb. 1, CME published a report stating that the average daily trade volume for its BTC contracts was $80 million during the previous 283 days, which, combined with CBOE’s approximately $10.65 million in daily trade, shows that the futures markets are currently falling roughly 4.5 percent short of rivaling the 24-hour trade volume between BTC and USDT on Binance.

Do you think that we will continue to see a decline in trade activity across the futures markets this year? Share your thoughts in the comments section below!

Images courtesy of Shutterstock, Tradeblock

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