The Cryptocurrency Legislation Landscape in Indonesia in 2024

Indonesia’s approach to cryptocurrency regulation in 2024 is characterized by a mix of cautious legal frameworks, an emerging focus on investor protection, and innovative strides in digital currency. The Indonesian market has adapted to the global trends in cryptocurrency, striking a balance between regulation and fostering growth in the sector.

Regulatory Shift and Oversight

A significant change in Indonesia’s cryptocurrency regulatory landscape is the planned transfer of regulation, supervision, and oversight of cryptocurrency investments to the Financial Service Authority (OJK). This move, outlined by Finance Minister Sri Mulyani Indrawati, is part of a broader financial sector legislation currently being debated in parliament. The goal is to enhance investor protection in the high-risk environment of cryptocurrency investments. This new bill will empower OJK to regulate digital asset activities, including crypto assets and financial sector technology innovation​​.

Legal Status and Trading Regulations

Cryptocurrency in Indonesia is recognized as a trading asset or commodity, not as an official currency for transactions. The trading of cryptocurrencies is legal, overseen by the Indonesian Commodity Futures Trading Supervisory Authority (BAPPEBTI). Regulation No. 5 of 2019 from BAPPEBTI offers guidelines for handling cryptocurrency in the Indonesian market. Financial institutions are not permitted to sell or support the sale of crypto assets. Instead, the Indonesian Blockchain Association takes a leading role in crypto regulation, including the examination of individuals before any token offering. Indonesia’s crypto exchange trading, also known as bourse, is poised to become a significant player in Asia, surpassing Hong Kong​​.

Compliance and Restrictions

Cryptocurrencies in Indonesia must comply with risk assessment, anti-money laundering (AML), and countering the financing of terrorism (CFT) requirements. Regulations demand that bitcoin traders maintain a transaction history for at least five years and keep a server within the nation. Due to these restrictions, cryptocurrencies can only be traded on an Indonesian futures exchange as commodities. This demarcation distinguishes cryptocurrencies from financial securities under Indonesian law​​.

Future Developments and Digital Rupiah

The Law on Development and Strengthening of the Financial Sector, once approved, will usher in new changes in the crypto asset market. This law intends to update existing financial sector regulations, including those related to crypto assets. With this law, the CFTRA will cede its oversight role to OJK, which will establish a Board of Commissioners to regulate digital currency activities. This transition is expected to be completed within 24 months from the law’s promulgation​​.

Furthermore, Bank Indonesia is entering the cryptocurrency realm by introducing its Central Bank Digital Currency (CBDC), known as Digital Rupiah. This development is anticipated to influence the cryptocurrency market, with expectations of more stable price fluctuations and better legal protection due to its centralized nature. These advancements, particularly the new laws, are likely to enhance the competitiveness of Indonesia’s crypto-asset market and provide clarity to the public​​.

In summary, Indonesia’s cryptocurrency legislation landscape in 2024 reflects a dynamic and evolving environment. The shift towards enhanced regulatory oversight, the legal recognition of cryptocurrencies as commodities, stringent compliance requirements, and the introduction of the Digital Rupiah signify Indonesia’s proactive and strategic approach to navigating the complexities of the digital currency world.