April 19, 2024
Policy & Regulation

Indonesia Mandates Regulatory Sandbox for Crypto Assets

The Indonesian Financial Services Authority (OJK) has ordered that local financial institutions that launch new products and services, including crypto asset offerings, must participate in the regulatory sandbox. This move is aimed at safeguarding consumers while fostering innovation.

Regulatory Sandbox: A Crucial Step for Crypto Asset Testing

According to DetikFinance, once licensed and overseen, crypto assets will be evaluated under the regulatory sandbox environment. This means that enterprises dealing with crypto assets will have to undergo a rigorous evaluation by regulators before being approved to operate in Indonesia.

Hasan Fawzi, head of the country’s supervision of the financial sector technology innovation, emphasized the importance of this move in combating fraudulent investments. He stated,

“I think this is our spirit at OJK, especially in consumer protection and education. We really hope that all of our regulatory mechanisms will be present and have a direct impact on preventing fraudulent investments.”

Statement from Hasan Fawzi

OJK to Oversee Crypto Industry Regulation from January 2025

As part of this initiative, the OJK will assume regulatory authority over the crypto industry starting January 2025. Currently overseen by the commodities agency, Bappebti, crypto assets are classified as commodities. However, with the transition to OJK’s jurisdiction, speculation suggests a potential reclassification as financial instruments.

Indonesia’s Crypto Landscape: On the Rise

Indonesia’s cryptocurrency market has grown significantly, particularly since the election of a pro-crypto vice president. During his campaign, Gibran Rakabuming Raka committed to support blockchain, cryptocurrency, artificial intelligence, and cybersecurity efforts, to develop local digital talent.

In 2023, the Indonesian Crypto Asset Futures Exchange will be launched, marking a significant milestone for the country. It is monitored by local regulators and acts as Indonesia’s sole legal platform for digital asset exchange, as well as a pilot project for blockchain in public services.

Earlier discussions about adjustments to crypto taxation highlight Indonesia’s developing stance on digital assets, indicating a commitment to creating a favorable environment for crypto innovation while maintaining regulatory control.

Photo by Alesia Kozik

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