April 22, 2024

Indonesia to Implement Regulatory Sandbox for Crypto Firms Ahead of OJK Supervision

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Indonesia is gearing up for a significant regulatory shift in its cryptocurrency sector, with plans to introduce a regulatory sandbox for crypto firms before transitioning supervision to the Financial Services Authority (OJK) in January 2025.

Hasan Fawzi, the head of supervision for financial technology, digital financial assets, and crypto at OJK, emphasized the alignment of this initiative with the regulator’s focus on consumer protection and education. Speaking at a media briefing on Tuesday, Fawzi highlighted the importance of regulatory mechanisms in safeguarding against fraudulent investments, underscoring the pivotal role of the sandbox in this regard.

The regulatory sandbox will serve as a controlled environment for evaluating crypto firms before granting them licenses to operate in Indonesia. Firms will undergo rigorous testing and innovation development processes within this space to ensure the safety and reliability of their products and services. By conducting trial runs in an isolated environment, the sandbox aims to enhance security and promote responsible management practices within the financial sector.

Notably, firms that offer crypto services in Indonesia without undergoing evaluation in the sandbox will be deemed to be operating illegally, signaling the regulatory authorities’ commitment to enforcing compliance within the industry.

Currently, oversight of the crypto sector in Indonesia rests with the commodities and futures trading regulator, Bappebti, as crypto assets are classified as commodities. However, with the impending transition to OJK’s supervision, crypto is likely to be reclassified as financial instruments, reflecting the evolving regulatory landscape in the country.

The introduction of the regulatory sandbox represents a proactive approach by Indonesian authorities to adapt to the dynamic nature of the crypto industry while upholding regulatory standards and protecting consumer interests. As the deadline for OJK’s oversight draws nearer, crypto firms operating in Indonesia will need to prepare for comprehensive evaluations within the sandbox to ensure compliance with regulatory requirements.

Digital Assets Desk

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