Indonesia will regulate crypto assets as securities

The Indonesian government has made changes to the country’s legislation, according to which digital assets will be considered securities.

After several months of discussions, on January 12, Indonesian President Joko Widodo signed a law according to which the Indonesian Financial Services Authority (OJK) will regulate the cryptocurrency industry in the country, without the participation of the Commodity Futures Trading Regulatory Agency (CoFTRA). These changes mean that Indonesian regulators will treat cryptocurrencies as securities rather than commodities. Now, the same requirements that fall under investment contracts will apply to the placement and sale of cryptocurrencies.

Asih Karnengsih, head of ABI’s public blockchain development group, called the initiative the right move. The adopted law will update the outdated regulatory framework of the state, bringing it into line with the rapid changes taking place in the digital asset industry. This proves the progressive development of the industry, because regulators began to understand that crypto assets are much broader than just trading, says Karnengsih. He suggested that the transfer of authority from CoFTRA to OJK could take several years to avoid drastic changes in the local cryptocurrency ecosystem.

However, given that OJK is suspicious of cryptocurrencies, the industry will be much more regulated in the country. The agency has repeatedly warned the public about the risks of crypto assets and reminded financial institutions that they are prohibited from using them.

Earlier, the governor of the Central Bank of Indonesia said that cryptocurrencies pose a threat to the financial system, but at the same time motivate central banks to create their own digital currencies. Last fall, the Central Bank of Indonesia introduced the concept of a digital Indonesian rupiah due to the increase in digital payments.