Indonesia's Financial Services Authority To Regulate Crypto Under New Sandbox Guidelines
Summary:
The Indonesian Financial Services Authority (OJK) has stipulated that financial institutions introducing new offerings, including cryptocurrencies, must first complete a regulatory sandbox phase. Post-regulation, future crypto assets will also need to undergo this process, serving as a measure to prevent fraudulent investments. The OJK has announced plans to regulate the crypto industry from January 2025, taking over from the country's commodities agency. Indonesia's crypto landscape has been dynamic recently, with a pro-crypto vice president elected and the launch of its national crypto exchange. A review of the dual-tax system on crypto is also being considered by officials.
The governing body overseeing financial services in Indonesia, the Financial Services Authority (OJK), has stipulated that domestic financial entities that are rolling out fresh offerings need to participate in what is termed a regulatory sandbox, essentially a test phase for new developments, including cryptocurrency-related offerings. A report from DetikFinance, an Indonesian news service, has highlighted that, following regulation and supervision, any future crypto assets will also need to undergo this regulatory sandbox process. This will effectively mean that crypto businesses at the sandbox phase will need to seek approval from the regulating body in order to operate within the nation. Regulatory sandboxing is normally used by businesses to try out new, innovative products or services on a temporary basis.
Hasan Fawzi, a high-ranking official overseeing the supervision of technological innovation in finance, as well as digital and crypto assets, confirmed sandbox inclusion for crypto assets, as a move to counter potential fraudulent investment schemes. He explained that their core motivation at the OJK is the protection and education of consumers and that it's their hope that all regulating mechanisms will directly impact and deter fraudulent investments.
Following this announcement, the OJK has also made known its plans to assume control over the regulation of the crypto industry from January 2025 onwards. Currently, this responsibility lies with the country's commodities agency, Bappebti. Despite being classified as a commodity within Indonesia currently, speculation suggests that crypto assets may be recategorized as financial instruments once they fall under the governance of the OJK.
In recent times, there has been a growing intrigue surrounding the cryptocurrency sphere within Indonesia, with the election of a crypto-friendly vice president in the latest presidential elections. Gibran Rakabuming Raka expressed intentions during his campaign to foster an environment capable of producing experts in the fields of blockchain, cryptocurrency, artificial intelligence and cybersecurity, specifically aiming to stimulate the local youth's involvement in the digital arena.
The preceding year saw the debut of Indonesia's very own cryptocurrency exchange platform called the Indonesian Crypto Asset Futures Exchange, under the watch of local regulators. This stands as the single legal cryptocurrency exchange platform within the country and is also looking into the utilization of blockchain in public service sectors.
Earlier in the month, reports circulated suggesting that Indonesian officials are considering a revision of the dual-tax system on cryptocurrency, encouraging further analysis of the current 0.1% capital gains tax and the 0.11% Value-Added Tax imposed on cryptocurrency transactions.
Published At
3/28/2024 1:43:11 PM
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