The Indonesian Financial Services Authority (OJK) has issued a new mandate requiring all financial institutions introducing new products and services, including those related to crypto assets, to participate in a regulatory sandbox.

This innovation testing and development space is aimed at fostering responsible technological advancement in the financial sector with robust risk management.

Hasan Fawzi

Hasan Fawzi, the Chief Executive of the Supervision of Financial Sector Technology Innovation, Digital Financial Assets, and Crypto Assets at OJK, highlighted the initiative’s role in enhancing consumer protection and education.

During a media briefing at the OJK Office in Central Jakarta on Tuesday, Fawzi emphasised that the regulatory sandbox is crucial for curbing fraudulent investment schemes, in a statement reported by DetikFinance.

With this regulation, future crypto companies will need to have their products or new business models vetted within the sandbox to ensure legality and compliance.

Those failing to comply will be deemed unlicensed or illegal. This approach aims to provide clear guidance to consumers on making informed choices regarding crypto investments.

The integration of crypto asset supervision and regulation into OJK’s purview, transferring from the Commodity Futures Trading Supervisory Agency (Bappebti) of the Ministry of Trade, aligns with the Financial Sector Development and Strengthening Law (UU P2SK).

The regulatory sandbox serves as a critical tool for both regulators and digital finance practitioners in the crypto asset sector to familiarise themselves with OJK’s regulatory and supervisory frameworks.

Featured image credit: Edited from Freepik