What Are Indonesia's New Digital Asset Regulations?

The Financial Services Authority (OJK) is taking over regulatory oversight from the Trade Ministry, causing substantial changes in Indonesia's digital asset ecosystem. With new legislation due to go into force, the country is prepared to overhaul its crypto ecosystem and cement its place as a worldwide leader in digital assets. Here's all you need to know about the changing regulations and their possible consequences.

OJK Takes Over Indonesia's Crypto Regulation

Indonesia revised its Financial industry Law in 2024, moving authority for the digital asset industry from the Commodity Futures Trading Agency (Bappebti) to the Financial Services Authority (OJK). The transition, which begins on January 12, intends to bring Indonesia's cryptocurrency rules in line with global norms.

OJK head Mahendra Siregar underlined the need for a smooth turnover, saying, “We've been working closely with the Trade Ministry to ensure a smooth process.” Once adopted, the rule will serve as the legal foundation for the transition.

The OJK has created a three-phase transition plan that will take place over the next two years. These include revising current legislation, developing new recommendations, and offering assistance to Virtual Asset Service Providers (VASPs). Stakeholders generally support this decision, citing OJK's knowledge as a crucial asset.

VAT on Crypto Transactions Sparks Debate

As Indonesia's legal environment transforms, a new 11% Value-Added Tax (VAT) on digital asset transactions, which went into force on January 1, has caused criticism. Industry executives argue that this levy would stifle the sector's expansion.

Oscar Darmawan, CEO of Indodax, Indonesia's largest exchange, emphasized the possible negative consequences of the VAT. “Balanced policies will promote a more favorable ecology. Crypto assets are not subject to VAT in many jurisdictions since they are deemed part of a financial transaction,” he said.

Despite their reservations, VASPs like Indodax are determined to comply with the new VAT while campaigning for its modification.

Indonesia's Rising Position as a Global Crypto Leader

Indonesia has become one of the world's major digital asset marketplaces. Indonesians spent Rp556.53 trillion ($34.5 billion) in the first 11 months of 2024, a 350% increase over the previous year. In addition, the country has risen in the Chainalysis Global Adoption Index, ranking third internationally in 2024.

Experts credit this increase to a mix of increasing adoption rates, new platforms, and supporting regulatory frameworks. Despite ongoing hurdles, Indonesia's digital asset industry shows no signs of faltering.

Final Thought

Indonesia's new digital asset legislation represents a watershed point in the country's crypto industry. As the OJK takes leadership and strives to apply worldwide best practices, the industry will gain stability and confidence. While problems such as the VAT tax exist, Indonesia's stratospheric ascent as a digital asset center highlights its potential to dominate the global crypto economy.