Indonesia is in a race to transition oversight of the country’s digital asset sector from the Trade Ministry to the financial services watchdog as a new law looms.
Indonesia adopted the amended Financial Sector Law in 2024, which hands ‘crypto’ jurisdiction to the Financial Services Authority (OJK). The sector has been policed by the Commodity Futures Trading Agency (Bappebti), which falls under the country’s Ministry of Trade. The new law is set to take effect on January 12, and the two authorities are racing to put measures in place for a smooth transition.
OJK chair Mahendra Siregar told the media on January 2 that preparations for the transition were in high gear.
“We’ve been working closely with the Trade Ministry to ensure a seamless process. Once the regulation is issued, it will provide the legal basis for the transition,” he stated, as reported by local outlets.
OJK followed this by publishing a transition plan outlining a gradual handover over the next two years. In the first of the three transition phases, the agency will focus on refining the existing regulations to meet global standards, ensuring a “soft landing” for virtual asset service providers (VASPs). The subsequent phases will improve the laws, offer new guidelines, and provide support to the operators.
Stakeholders have welcomed the transition, believing that OJK is more suited to overseeing digital assets.
“While OJK oversight may bring stricter regulations, its experience will benefit investors,” local digital economy expert Nailul Huda told one outlet.
Local exchange Triv’s CEO Gabriel Rey added that OJK’s active consultation with VASPs has strengthened their belief that it’s suited to police the sector. Additionally, OJK has pledged to show continuity with the existing Bappebti framework and gradually improve it, reducing stakeholders’ concerns.
However, they have criticized the slow transition, which they say could be a ploy by Bappebti to hold onto its power.
Elsewhere, the leaders of Indonesian VASPs have called on the government to scrap value-added tax (VAT) on digital asset transactions. The new VAT kicked in on January 1 this year.
Speaking at a January 4 event, Oscar Darmawan, the CEO of Indonesia’s largest exchange, Indodax, said that scrapping the VAT could boost trading volumes, which more than tripled last year.
“We believe that balanced regulations will create a more conducive ecosystem. In many countries, crypto assets are not subject to VAT because they are considered part of financial transactions,” he stated.
However, he pledged his exchange’s commitment to the VAT tax until it’s reviewed.
Indonesia is one of the world’s largest digital asset hubs. In the first 11 months of 2024, Indonesians transacted Rp556.53 trillion ($34.5 billion)—a 350% increase year-on-year—as holders hit 21 million. The country ranked third for adoption in last year’s Chainalysis Global Adoption Index, up from seventh the year prior.
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