Indonesia is in a race to shift oversight of the country’s digital asset sector from the trade ministry to the financial services watchdog as a new law takes effect.
Indonesia adopted the amended Financial Sector Act in 2024, which will transfer crypto jurisdiction to the Financial Services Authority (OJK). The sector was policed by the Commodity Futures Trading Agency (Bappebti), which falls under the country’s Ministry of Commerce. The new law is due to come into effect on January 12, and the two authorities are struggling to put measures in place for a smooth transition.
OJK chairman Mahendra Siregar told the media on January 2 that preparations for the transition were in full swing.
“We have worked closely with the Ministry of Commerce to ensure a seamless process. Once the regulation is issued, it will provide the legal basis for the transition,” he said, as reported from local outlets.
OJK then this of published 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 existing regulations to meet global standards, to ensure a “soft landing” for virtual asset service providers (VASPs). Subsequent phases will improve laws, provide new guidelines and provide operator support.
Stakeholders have welcomed the transition, believing that OJK is better suited to oversee digital assets.
“While OJK supervision will bring stricter regulations, its experience will benefit investors,” local digital economy expert Nailul Huda told an outlet.
Local exchange Triv’s CEO Gabriel Rey added that OJK’s active consultation with VASPs strengthened their belief that it is suitable to police the sector. In addition, OJK has pledged to show continuity with the existing one CoFTRA framework and gradually improve, reducing the concerns of stakeholders.
However, they have criticized the slow transition, which they say could be a ploy by Bappebti to maintain his power.
Elsewhere, Indonesian VASP leaders have called on the government to scrap Value Added Tax (VAT) digital asset transactions. The new VAT came into effect on January 1 this year.
Speaking at an event on January 4, Oscar Darmawan, the CEO of Indonesia’s largest exchange, Indodax, said that abolishing VAT could increase trading volumes, which more than tripled last year.
“We believe that balanced regulations will create a more leading ecosystem. In many countries, crypto assets are not subject to VAT, as they are considered part of financial transactions,” he said show off.
However, he has pledged his commitment to the VAT until it is reviewed.
Indonesia is one of the world’s largest digital asset hubs. In the first 11 months of 2024, Indonesians procured Rp556.53 trillion ($34.5 billion) – an increase of 350% year-on-year – as holders hit 21 million. The country classified Third for adoption in last year’s Chainalysis Global Adoption Index, up from seventh the previous year.
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