Indonesia to implement regulatory sandbox for crypto assets

Indonesia's Financial Services Authority (OJK) said domestic financial services institutions that offer new products and services should be included in the regulatory sandbox or leave room for testing upcoming innovations, including crypto-asset products.

According to a report by local Indonesian media Detik Finance, in the future, once they are regulated and controlled, crypto assets will have to go through a regulatory sandbox.

This means that crypto firms in the sand stage must be evaluated by the regulator before being allowed to operate in the country.

A sandbox is typically a tool for businesses to try and test new, innovative products or services for a limited period of time.

Hasan Fawzi, head of the country's financial sector technology innovation, digital financial assets and crypto assets regulation, said crypto assets have been included in the regulatory sandbox in an effort to eradicate fraudulent investments.

“I think this is our spirit in OJK, especially in consumer protection and education. We hope that all our control methods will be available and have a direct impact on preventing fraudulent investments.”

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As part of this announcement, the OJK will take over the regulation of the crypto industry from January 2025. It is currently under the jurisdiction of the country's commodity agency Bapebti.

Indonesia classifies crypto assets as commodities, although it is speculated that when they are transferred to OJK management, they may be reclassified as financial instruments.

The crypto landscape in Indonesia has been heating up over the past year, with a pro-crypto candidate being elected vice president in the recent presidential election.

In his election campaign, Gibran Rakabuming Raqqa promised to prepare blockchain, crypto, artificial intelligence (AI) and cyber security experts who will empower local youth in the digital space.

Last year, the country launched the historic national crypto exchange – Indonesia's crypto asset futures exchange – under the supervision of local regulators.

It serves as the country's only platform for legal exchange of digital assets. It has started conducting blockchain experiments in public services.

Earlier this month, Indonesian authorities were said to be considering changes to the combined tax on crypto, calling for a reassessment of the 0.1% capital gains tax on crypto and the 0.11% VAT on crypto transactions.

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