Digital Gold Providers in Indonesia Must Have CoFTRA Permits

Since February 2019, all gold providers or companies that facilitate gold buying and selling transactions through digital platforms in Indonesia are required to comply with regulations issued by the Commodity Futures Trading Regulatory Agency (CoFTRA).

Regulation Number 4 of 2019 concerning the Implementation of the Digital Gold Physical Market on the Futures Exchange requires digital gold providers to pocket license from CoFTRA, whose derivatives are also required to obtain a license from the Jakarta Futures Exchange (BBJ) and the Indonesian Futures Clearing House (KBI).

Met at the Tamasia Talks event, the Head of the Bureau of Market Guidance and Development, Sahudi, said that his party had full authority to supervise, foster and develop the digital gold industry in the country after a coordination meeting with the Financial Services Authority (OJK).

"There are complaints from the public to the OJK that there are [digital] gold traders who trade gold but do not have permission from the authorities. Therefore, this rule was issued to provide legal and business certainty to digital gold traders and protect the public," said Sahudi.

Then, what is the reason that digital gold providers cannot register directly with CoFTRA, but must go through BBJ and KBI first?

Basically, explained BBJ President Director Stephanus Paulus Lumintang, CoFTRA's function is to oversee commodities in Indonesia, gold is one of them. All commodity trading activities carried out by JFX and KBI must obtain CoFTRA approval.

In other words, both JFX and KBI play an important role in protecting gold investors. Both parties become self-regulatory organization to make policies for its members. Paulus said that there were already four digital gold provider companies that had registered.

"We have to grow investor confidence whether it is safe to invest in digital gold and where the money is stored. Therefore, digital gold providers who register must become members of BBJ and KBI," said the man who is familiarly called Paulus.

Meanwhile, according to KBI President Director Fajar Wibhiyadi, his party also plays a role in ensuring the management of the amount of money and gold. If there is a maturity of a transaction, KBI can be a witness. "Our position is in the middle between investors and actors," he said.

Obligations of digital gold providers

There are several points summarized from this new rule. First, the criteria for business actors who are required to have a license are gold traders who have a digital buying and selling transaction platform, purchases are installments without a limit on the amount, and the delivery of gold is carried out at a later date.

Digital gold providers are required to deposit a minimum capital of IDR 20 billion with a final capital balance of at least IDR 16 billion no later than February 8, 2022. Then, starting February 9, 2022, capital ownership must reach IDR 100 billion with a final capital balance of at least IDR 8 billion.

In addition, the digital gold transaction system must be connected directly to BBJ and KBI to facilitate supervision by both parties. For this reason, applicants must become members of the BBJ and KBI in order to obtain a permit from CoFTRA.

Sahudi also emphasized that every digital gold provider must have a physical form of gold before making gold buying and selling transactions. Digital gold providers are required to store at least 25 kilograms of gold in a storage area approved by CoFTRA.

"If the above requirements have not been met, they cannot immediately sell even though they already have a license. In essence, we will take action against unlicensed digital gold traders," added Sahudi.

Fulfill CoFTRA's rules

Co-founder & CEO Tamasia Muhammad Assad appreciated CoFTRA's move to provide a legal umbrella for digital platform-based gold providers. He admitted that his party is committed to providing legal certainty and security to its buyers.

According to Assad, Tamasia is still waiting for the process as a digital member of BBJ and KBI. It is also waiting for the appointment of a gold depository by CoFTRA.

"Once we get permits from BBJ and KBI, we can get permits from CoFTRA. Question repository, we have to wait for another two to three months," he said.

Tamasia is an application-based digital gold provider that was founded in 2017. Until now, Tamasia has 200 thousand users with an average purchase of around Rp. 50 thousand-100 thousand per user.

Assad targets this year to get an additional 300 thousand new users and as much as 100-150 kg of gold sold with a focus on the B2B customer segment.