Indonesian New Regulation Classifying Cryptos as Securities
The enactment of new Indonesian law is set to alter crypto classification to security. The swap from the commodity category would broaden the crypto industry’s development.
The Indonesian law is shifting the digital assets regulatory powers from the commodities’ watchdog CoFTRA. Instead, it grants crypto oversight powers to the country’s Financial Services Authority (OJK). The law marks a shift in Indonesia’s approach to policing the crypto industry, confirming the existence of more scope than the usual asset trading.
Overhauling the Outdated Laws to Fit Present Development
The law garnered executive approval through the January 12 assent by Indonesian President Joko Widodo. The new law overhauls over 17 local laws considered outdated and misaligned with present-day tech development. The law is projected to alter the existing crypto classification from commodities that the government hoped to utilize and benefit the domestic economy.
The country’s blockchain trade association (ABI) considered the switch to the new regulation signals optimism in the technologies underlying cryptos. ABI lauded the new law as easing OJK’s supervisory role in making up the financial sector and technological innovation measures. The subsequent address by ABI chairperson Asih Karnengsih commended the switch as demonstrating the regulator’s recognition that digital assets involve broader scope beyond trading.
Ambitious Two-year Transition Period
Indonesia portrayed faster growth in the crypto markets owing to the popularity of speculative trading in 2022. The country’s trade statistics estimated the crypto traders to exceed 14 million while stock traders were 9 million. Treating crypto as commodities elicited debate that mirrored conversations witnessed in other economies led by the US. Karnengsih observed that the present shift would give crypto assets securities-related requirements, treatment and restrictions.
Luno crypto exchange manager Jay Jayawijayaningtiyas revealed that OJK would alter the scope, unlike the commodities regulator, despite the changeover taking two years. He decried that CoFTRA mandated exchanges to disclose periodic reports detailing transactions executed on their platforms. Jay projected that the changeover would eliminate the delays experienced when seeking approval for local token issuance.
The changeover will ease the actualization of plans to establish the national crypto exchange backed by an index before the lapse of the two-year transition. The index is set to mirror NYSE to facilitate monitoring of the market activities. In support of centralized exchange, Karnengsih emphasized that the index-backed platform will inspire market development and supervision.
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