Indonesia plans to tighten oversight of crypto market

Indonesia’s Finance Minister Sri Mulyani Indrawati speaks during a side event on the G20 Finance Ministers and Central Bank Governors Meeting in Nusa Dua, Bali, Indonesia, 14 July 2022. Made Nagi/Pool via REUTERS

JAKARTA  – Indonesia plans to move the regulation, supervision and oversight of cryptocurrency investments to the Financial Service Authority (OJK) to better protect investors, its finance minister said on Thursday.

Currently, the Trade Ministry and the Commodity Futures Trading Regulatory Agency jointly oversee cryptocurrency in Southeast Asia’s largest economy, where there has been a boom in such investments.

The new plan, laid out by Finance Minister Sri Mulyani Indrawati, is part of financial sector legislation that is being debated in parliament.

The use of cryptocurrency assets as a means of payment is illegal in Indonesia, but transactions for investment are allowed in the commodities market.

Sri Mulyani said as of June, there were 15.1 million cryptocurrency investors in the country, an exponential rise from just 4 million in 2020. That compared with 9.1 million investors in the stock market as of June.

“We need to build a mechanism of supervision and investor protection that is quite strong and reliable especially for investment instruments that are high risk,” she told a parliamentary hearing, noting that the cryptocurrency market has faced turbulence recently.

The new bill would empower OJK to regulate and supervise “digital asset activities, including crypto assets and financial sector technology innovation,” Sri Mulyani added.

Parliament officially submitted the bill to the government in September. Thursday’s meeting was to present the government’s first response and any additions to the proposed bill.

The bill will be passed into law after both the legislative and executive branches agreed on all provisions.

Parliament’s proposals also contain provisions to widen the central bank’s mandate to include economic growth in addition to price stability.

Sri Mulyani said she supported the proposal, but also underlined the importance of the independence of financial regulators, especially that of BI.

“It is important for us to continue to provide signals that independence and credibility of institutions … are strengthened and maintained because this is the most important asset to maintain financial system stability,” she said.