Indonesia explores taxing crypto profits amid a surge in popularity among locals

• Indonesia is looking to tax the trading cryptocurrencies, Reuters reported.

• The country has banned cryptocurrencies as a method of payment but allows them to be traded as a commodity.
• The trend is growing in Indonesia but, so far, not many people trade crypto.

Indonesia is looking to tax the trading cryptocurrencies, Reuters reported, as the Southeast Asian nation moves to temper the rising popularity of the digital asset space among its locals as well as shore up some state revenue following the devastating pandemic.

The largest country in the region has banned cryptocurrencies as a mode of payment but allows them to be traded as a commodity.

"It is important to know that...if there is a profit or capital gain generated from a transaction, the profit is an object of income tax," Neilmaldrin Noor, a spokesman at Indonesia's tax office, told Reuters.

Noor however clarified that a tax scheme for cryptocurrency was still at the discussion stage.

The country's Financial Services Authority has warned Indonesians on the risks of cryptocurrencies, particularly around their price volatility.

In Indonesia, the world's fourth most populated nation with 275 million people, many use Indodax, a cryptocurrency exchange platform that claims to be the largest in the country, Reuters reported.

Indodax in April said the number of active members on its platform hit three million, rising from around 2.3 million at the start of the year.

Cryptocurrency transactions in the country are considered to be small, mainly due to the lack of education among the general population, CEO of Indodax, Oscar Darmawan, in an April statement, reported by Tempo.Co.

Darmawan did add that the number of transactions is growing, moving up in tandem with the global market.

Worldwide, cryptocurrencies have soared in 2021 - with bitcoin rising 95% year to date, ether surging 380%, and dogecoin skyrocketing an astounding 13,000%.