Indonesia is making significant moves to strengthen the oversight of its rapidly growing digital asset sector. As part of the country’s regulatory reforms, the responsibility for overseeing digital currencies, such as cryptocurrencies, will soon shift from the Trade Ministry to the Financial Services Authority (OJK). This transition follows the adoption of an amended Financial Sector Law in 2024, which grants OJK jurisdiction over digital assets, a role previously handled by the Commodity Futures Trading Agency (Bappebti) under the Trade Ministry.
Transition of Oversight
The new regulatory framework, set to take effect on January 12, 2025, is designed to ensure that Indonesia’s digital asset sector operates under more robust financial regulations. This shift to the OJK marks a significant overhaul of the country’s approach to cryptocurrencies and digital assets. Mahendra Siregar, chair of OJK, confirmed on January 2 that preparations for the handover were progressing smoothly, with both agencies collaborating closely to ensure a seamless transition.
In a January 2 media briefing, Siregar outlined the steps involved in the transition process, revealing that OJK had already published a transition plan to ensure a smooth shift over the next two years. The transition will occur in three phases:
Phase 1 will focus on refining existing regulations to align with international standards, providing a “soft landing” for Virtual Asset Service Providers (VASPs).
The subsequent phases will continue to improve legal frameworks, offer new guidelines, and provide further support to operators in the digital asset space.
Benefits of OJK Oversight
The transition has been met with largely positive reactions from stakeholders within Indonesia’s digital asset ecosystem. Many believe that OJK, with its established track record in overseeing financial markets, is better equipped to regulate digital assets. Local digital economy expert, Nailul Huda, emphasized that while OJK’s approach might result in stricter regulations, its experience in financial oversight will ultimately benefit investors by providing more clarity and security.
Gabriel Rey, CEO of Triv, one of Indonesia’s leading digital exchanges, added that OJK’s active consultation with VASPs has strengthened confidence in its ability to manage the sector. OJK has pledged to maintain continuity with the existing framework set by Bappebti, addressing concerns and ensuring minimal disruption during the transition.
Criticism of Slow Transition
Despite the positive reception, some industry players have raised concerns about the slow pace of the handover. Critics argue that this delay may be a tactic by Bappebti to retain its control over the digital asset sector. However, OJK’s clear plans and transparent approach have helped mitigate some of these concerns.
VAT on Digital Asset Transactions
Another point of contention in the digital asset sector is the recently implemented Value-Added Tax (VAT) on cryptocurrency transactions, which took effect on January 1, 2025. Oscar Darmawan, CEO of Indodax, Indonesia’s largest digital exchange, voiced his concerns at a January 4 event, calling for the scrapping of VAT on digital asset transactions. According to Darmawan, this move could significantly boost trading volumes, which have already seen impressive growth. In 2024, Indonesian cryptocurrency transactions reached Rp556.53 trillion ($34.5 billion) in the first 11 months, a 350% increase from the previous year.
Darwan further explained that many countries do not apply VAT to cryptocurrencies because they are treated as financial transactions, not goods. While Indodax has pledged to comply with the VAT rules, they hope for a review of the tax in the future to foster a more conducive ecosystem for digital asset trading in Indonesia.
Indonesia’s Growing Role in the Digital Asset Space
Indonesia’s digital asset market is thriving. The country ranked third in the Chainalysis Global Adoption Index in 2024, up from seventh in 2023. As of 2024, Indonesia boasts 21 million cryptocurrency holders, highlighting the widespread adoption of digital assets. In the first 11 months of 2024, transactions surged to a staggering $34.5 billion, further solidifying the country’s position as one of the world’s largest digital asset hubs.
Conclusion
Indonesia’s decision to shift oversight of digital currencies to the Financial Services Authority (OJK) represents a key step in enhancing the regulatory framework around cryptocurrencies and digital assets. The transition is expected to bring about clearer, more standardized regulations, boosting investor confidence and aligning the country’s digital asset sector with global standards. However, as with any significant regulatory overhaul, industry stakeholders are closely watching to ensure that the changes benefit all players in the ecosystem, from individual investors to large service providers.
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