Pioneering Crypto: Indonesia's Trailblazing Approach With Regulatory Sandboxes

The Indonesian Financial Services Authority (OJK) stated that local financial firms rolling out new products must join the regulatory sandbox or make space for trying out new products, like crypto assets.

A report from the Indonesian news site DetikFinance says that someday, crypto money will have to follow the rules and get checked out before it can be used, like how kids play in a sandbox under watch.

The regulator must evaluate crypto firms in the sandbox stage before approving them to operate in the country.

Regulatory sandboxes are like playgrounds for companies to try out new, cool stuff they’ve come up with for a bit and see how it goes.

Hasan Fawzi, who leads the country’s oversight of financial tech, digital assets, and crypto, mentioned that we’ve put crypto under watch in our test zone to stop bad investments.

“I reckon this embodies our ethos at OJK, particularly regarding safeguarding consumers and educating them. We earnestly aim for our regulations to be active and effective in thwarting fraudulent investments.”

Indonesia’s Crypto Regulation Transition

In this announcement, the OJK declares its assumption of regulatory authority over the crypto industry from Jan 2025 onward. Presently, oversight falls within Indonesia’s commodities agency, Bappebti.

While currently categorized as commodities, there is speculation that crypto assets may be reclassified as financial instruments under OJK’s governance.

Indonesia’s crypto sphere has experienced heightened activity over the past year, particularly with the election of a vice president supportive of cryptocurrencies in the most recent presidential elections.

During his election campaign, Gibran Rakabuming Raka pledged to mobilize experts in blockchain, cryptocurrencies, artificial intelligence (AI), and cybersecurity to inspire local youth in the digital realm.

Last year saw the inauguration of the Indonesian Crypto Asset Futures Exchange, a pioneering national cryptocurrency exchange overseen by domestic regulators.

Functioning as the nation’s primary platform for the legitimate trading of digital assets, it has initiated trials of blockchain technology in public services.

Recently, Indonesian officials have contemplated revisions to the dual taxation system on cryptocurrencies, advocating reassessment of the existing 0.1% capital gains tax and 0.11% VAT applied to cryptocurrency transactions.

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