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Indonesia Will Require Crypto Products to Pass Through Regulatory Sandbox or Be Deemed Illegal
The initiative is aimed at combating fraud and will kick in at the start of next year.
Updated Mar 28, 2024, 8:51 a.m. Published Mar 28, 2024, 8:49 a.m.
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- Indonesia's Financial Services Authority (OJK) takes over regulation of the crypto industry from the commodities agency Bappebti in January 2025.
- Crypto firms will have to pass an evaluation in a sandbox environment by the new regulator before they are granted approval to operate in the country.
Crypto firms will need to be evaluated in a regulatory sandbox before they're licensed to operate in Indonesia once supervision of the industry passes to the Financial Services Authority (OJK) in January 2025.
"This aligns with our spirit at OJK, particularly in consumer protection and education," Hasan Fawzi, the regulator's head of supervision for financial technology, digital financial assets and crypto, said at a media briefing on Tuesday. "We expect our regulatory mechanisms to directly impact the prevention of fraudulent investments."
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Firms that offer services in the country without being evaluated in the sandbox will be considered to be operating illegally.
A regulatory sandbox serves as a testing and innovation development space to evaluate products and make sure they're safe and reliable. It provides an isolated environment to conduct trial runs that help enhance security and responsible management in the financial sector.
The industry is currently supervised by the commodities and futures trading regulator, Bappebti, because crypto assets are classified as commodities. Once under OJK's oversight, crypto will most likely be reclassified as financial instruments.
The regulatory sandbox also allows crypto businesses to get used to the regulations and supervision enforced by OJK, Hasan said, reiterating a stance from earlier this month.
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