Indonesia Transfers Digital Currency Oversight to Financial Authority: What You Need to Know

Summary:

Indonesia transitions digital currency oversight to the Financial Services Authority (OJK).
The amended Financial Sector Law takes effect on January 12.
OJK's transition plan includes three phases for refining regulations.
Stakeholders welcome OJK's experience but criticize the slow transition.
VASPs call for removal of VAT on digital asset transactions to boost trading.

Indonesia is making significant strides in the oversight of its digital asset sector by transitioning from the Trade Ministry to the Financial Services Authority (OJK). This shift follows the adoption of the amended Financial Sector Law in 2024, which officially grants the OJK jurisdiction over cryptocurrencies.

Key Details of the Transition

The new law is set to take effect on January 12, prompting both the OJK and the Trade Ministry to expedite preparations for a smooth transition. OJK chair Mahendra Siregar reported that efforts are underway to ensure a seamless handover, which will lay the legal groundwork for the new regulatory framework.

Transition Phases and Stakeholder Reactions

The OJK has unveiled a three-phase transition plan aimed at refining existing regulations to align with global standards. The first phase will prioritize creating a “soft landing” for virtual asset service providers (VASPs), while subsequent phases will enhance laws and provide guidance and support for operators. Many stakeholders have expressed optimism about the transition, noting that the OJK's experience could lead to stricter yet beneficial regulations for investors.

Local exchange executives, such as Gabriel Rey from Triv, have praised the OJK's proactive engagement with VASPs, reinforcing confidence in their ability to regulate the sector effectively. However, there are concerns regarding the slow pace of the transition, which some believe may be a strategy by the Trade Ministry to retain control.

VAT Concerns and Market Impact

In addition to regulatory changes, leaders of Indonesian VASPs are advocating for the removal of the value-added tax (VAT) on digital asset transactions, which was imposed starting January 1. Oscar Darmawan, CEO of Indodax, highlighted that eliminating VAT could significantly enhance trading volumes.

Despite these challenges, Indonesia continues to establish itself as a major player in the global digital asset landscape, with the country ranking third in the Chainalysis Global Adoption Index for crypto adoption last year, following a remarkable 350% increase in transactions, amounting to Rp556.53 trillion (approximately $34.5 billion). The number of crypto holders in Indonesia has surged to 21 million.

Digital Asset Growth in Indonesia