Indonesia Sets Sight on Comprehensive Crypto Regulation: A Close Look at the Regulatory Sandbox Approach

2024-04-10, 01:53

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## [TL; DR]
Indonesia is set to introduce new crypto regulation aimed at promoting innovation and consumer safety.

All new crypto firms in Indonesia will need to participate in the Regulatory Sandbox Program.

In 2025 the Indonesia Financial Services Authority (OJK) will take over the regulation of cryptocurrencies from the Commodity Futures Trading Regulatory Agency.

## Introduction
Many countries that aim to create crypto-enabling environments are focusing on establishing relevant legislation that protects both consumers and the industry. Also, regulation helps to reduce friction between crypto businesses and regulatory authorities.

This analysis explores the regulatory development in Indonesia as well as how the cryptocurrency sector will benefit from its sandbox program. We will also discuss the existing crypto legislation in the country.

## Indonesia Plans to Implement Strict Crypto Regulation in 2025
Indonesia has adopted a very proactive stance towards cryptocurrencies through its new regulations that are in line with global developments. The country has promised to take a balanced approach that promotes crypto consumer protection Indonesia and innovation in the digital sector.

Basically, the country is refining [its existing crypto regulation](https://www.gate.io/learn/articles/crypto-regulation-in-2024/1966 "its existing crypto regulation") to create a safe, secure and thriving crypto market. It promises to introduce stricter cryptocurrency laws than before which will create a more conducive environment for digital currencies to thrive as well.

The Financial Services Authority (OJK) which is the Indonesian financial services regulator recently introduced new crypto legislation which will become effective in 2025. The Indonesia crypto regulation will guide financial institutions like banks and insurance companies that may need to venture into the digital sector.

Part of the regulations include the regulatory sandbox program focused on protecting the consumers. The financial services authority Indonesia said that the new regulations will mandate all financial institutions to undergo the crypto products evaluation Indonesia program, also called <a href="/ru/price/the-sandbox-sand" target="_blank" class="blog_inner_link">The Sandbox</a> program.

Read also: [Breaking: EU Passed New Crypto Regulation](https://www.gate.io/learn/articles/breaking-eu-passed-new-crypto-regulation/2393 "Breaking: EU Passed New Crypto Regulation")

It is through this program that the regulatory authority will assess different crypto business models Indonesia. Only businesses that meet its guidelines will be authorized to operate in the country.

According to Hasan Fawzi, the Executive Head of Financial Sector Technology Innovation, Digital Financial Assets and Crypto Assets Supervision, the core goal of the Sandbox program and the crypto law in general is to protect the consumers through crypto fraud prevention.

As per a BeInCrypto publication, [Fawzi said](https://beincrypto.com/indonesia-strict-crypto-regulation-2025/ "Fawzi said"), “This embodies our spirit at the OJK, especially in consumer protection and education. We expect all our regulatory mechanisms to directly impact the prevention of fraudulent investments.”

## Current Crypto Regulation in Indonesia
Since the new crypto regulation will come into effect in January 2025, the country is using its current laws to govern cryptocurrency activities. For example, the country uses Bappebti Regulation No. 8/2021 which contains guidelines for Physical Trading of Crypto Assets. This piece of regulations gives clear directions on how crypto traders should operate.

The country also has the Bappebti Regulation No. 4 of 2023 which stipulates the requirements for cryptoasset trading in Indonesia. For example it sets conditions for the storage and trading of digital assets.

Another piece of crypto regulation that currently exists in Indonesia is the Financial Omnibus Law (Law No. 4 of 2023). The provisions of this law governs the entire financial sector although it has some implications for the cryptocurrency sector.

## OJK’s Role in this New Indonesia crypto regulatory
The new Indonesia crypto regulations which will become effective in 2025 will coincide with the change of the crypto regulatory authority in the country. The Indonesia’s Financial Services Authority (OJK) will become the new financial services authority Indonesia as it will take over from the Commodity Futures Trading Regulatory Agency (Bappebti), operating under the Ministry of Trades supervision.

The reason for this change is to create a more integrated and comprehensive regulatory approach governing crypto assets than before. One of the key things the OJK is expected to do is to classify cryptocurrencies as securities which will have strong tax implications. The reclassification of cryptoassets as securities will lead to a reduction in taxes.

The Sandbox program will be at the center of the crypto regulatory framework in Indonesia. Pertaining to this new development, [Fawzi said](https://beincrypto.com/indonesia-strict-crypto-regulation-2025/ "Fawzi said"), “This aligns with our spirit at OJK, particularly in consumer protection and education. We expect our regulatory mechanisms to directly impact the prevention of fraudulent investments.”

Read also: [How are cryptocurrencies currently regulated in different countries](https://www.gate.io/blog_detail/378/how-are-cryptocurrencies-currently-regulated-in-countries-around-the-world "How are cryptocurrencies currently regulated in different countries")

## 2025 Regulatory Sandbox Program
As hinted above, the [regulatory Sandbox Crypto Program](https://www.gate.io/bitwiki/detail/467/regulatory-sandbox "regulatory Sandbox Crypto Program") will be at the center of the new cryptocurrency regulation Indonesia. The key objective of the Sandbox program is to enhance crypto fraud prevention and promote financial technology innovation Indonesia.

Related article: [What is The Sandbox & How to Join the Metaverse](https://www.gate.io/learn/articles/what-is-the-sandbox-how-to-join-the-metaverse/1599 "What is The Sandbox & How to Join the Metaverse")

For example, The Indonesian Financial Services Authority (OJK) has explained that local financial institutions that will be willing to offer new products and services should participate in the Sandbox program. In simple words, the regulatory sandboxes are tools for testing and experimenting with new innovative products or services before they are launched on the market.

Shedding more light on the Sandboxes Fawzi said, “I think this is our spirit at OJK, especially in consumer protection and education. We really hope that all of our regulatory mechanisms will be present and have a direct impact on preventing fraudulent investments.”

Related news: [Russian Crypto Regulation 'May Have to Wait Until 2025'](https://www.gate.io/post/CQQDFjYMQkpAQgghGxAdA19cWxgEDhkO0O0O/status/4996025 "Russian Crypto Regulation 'May Have to Wait Until 2025'")

Once the different financial institutions join the sandbox program it will become easy for crypto asset supervision Indonesia. In other words, the OJK will supervise all registered crypto firms and projects.

The Sandbox program will enable the financial sector innovation Indonesia to familiarize with the operations of the OJK as well as how the country’s regulations apply to the crypto sector. It is also important to note that crypto businesses that do not participate in the Sandbox program will be classified as unauthorized businesses.

Fawzi emphasized: “In essence, if an IT-based financial services provider is not registered as a participant in our sandbox, or later, after we have established certain clusters, whether licensed by the OJK or not, it will be deemed equivalent to other unauthorized entities.”

## Crypto Regulations Benefits and Drawbacks 
There is no question that crypto regulations are essential for crypto consumer protection Indonesia as well as promotion of innovation in the sector. In the case of Indonesia many investors will come into the country which may transform it into a crypto hub.

The main drawback is that unregistered crypto businesses will likely face legal hurdles in their operations. For example, some of them will be forced to pay hefty fines or close down. However, for the promotion of innovation in the crypto sector financial institutions should abide by the Indonesian regulations.

Important to know: [The Main Countries that Actually Banned Crypto](https://www.gate.io/blog_detail/716/the-main-countries-that-actually-banned-crypto "The Main Countries that Actually Banned Crypto")

## Conclusion 
Indonesia will introduce strict crypto regulation that will become effective in January 2025 and be supervised by the Financial Services Authority (OJK). By that time the Commodity Futures Trading Regulatory Agency (Bappebti) will no longer regulate and supervise crypto activities in the country. The law will require all crypto businesses to participate in the Regulatory Sandbox Program.

## FAQs about Crypto Regulations in Indonesia
### Who regulates crypto in Indonesia?
Currently, The Indonesia Financial Services Authority regulates and supervises cryptocurrency activities in Indonesia. However, starting from January 2025 The Indonesia Financial Services Authority (OJK) will take over the regulation of cryptocurrencies in the country.
### Is Indonesia a crypto friendly country?
Indonesia is a crypto friendly country that uses relevant regulations to protect consumers and support innovation. However, crypto firms should register with the  authority to start operating in the country.
### Is crypto taxed in Indonesia?
There is dual taxation of cryptocurrency in Indonesia comprising a 0.1% income tax and a 0.11% value-added tax (VAT). However, the country plans to reduce taxes on cryptocurrency in 2025.
### Is crypto legal in Bali?
It is legal to trade cryptocurrencies in Bali Indonesia although it is not legal to make payments using them. Therefore, people who use cryptocurrencies as means of payment may be jailed or heavily fined.

<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
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