INDONESIA Law and Practice Contributed by: Winnie Yamashita Rolindrawan, Bianca Putri Kadarisman and Qafaldi Putra Ismayudha, SSEK Law Firm
Regulation of Blockchain Technology Blockchain technology in itself, distinct from crypto- asset trading, is not specifically regulated in Indone- sia. The only formal recognition of blockchain as a business activity is KBLI Code 62014 for Blockchain Technology Development Activities. There is currently no specific licence from the OJK or any other Indo- nesian regulator requirement for companies engaged solely in blockchain development. As a result, regu- lated firms that outsource to or utilise blockchain technology solutions are subject to their existing reg- ulatory requirements and general technology-related obligations, without blockchain-specific rules. Data Privacy As there is no blockchain-specific regulatory frame- work, there are no blockchain-specific data privacy obligations applicable to blockchain companies; such companies are subject to the general personal data protection framework. The potential conflict between the obligations under such personal data protection framework and the nature of blockchain has not yet been addressed through specific guidance or regula- tion in Indonesia. 1.1.4 Smart Contracts Recognition of Smart Contracts Smart contracts are not specifically regulated or defined under Indonesian law. The only formal refer- ence to smart contracts appears in the elaboration to KBLI Code 62014, which describes the relevant busi- ness classification as covering blockchain technology development activities, including the implementation of smart contracts. This reference is limited to busi- ness classification purposes and does not constitute a regulatory or legal framework for smart contracts. Enforceability The enforceability of smart contracts in Indonesia is not expressly addressed by the laws and regulations. Under Indonesian contract law, a valid contract gen- erally requires agreement between parties, capacity to contract, a specific object and a lawful cause. In principle, smart contracts could be assessed against these requirements, but there is no judicial or regula- tory guidance specifically addressing this. Parties rely- ing on smart contracts in Indonesia accordingly face legal uncertainty, and it is advisable to supplement
• the innovation provides benefits, improves services and creates added value for consumers, the public and/or the financial services ecosystem; • the innovation is sufficiently developed and ready to undergo testing and further development; • the innovation requires testing and development support and has not previously been regulated or supervised under existing financial sector regula- tions; and • any other criteria determined by the OJK in con- sideration of developments in financial technology innovation. Where a blockchain-based business model satisfies the above criteria, an entity may apply to the OJK to participate in the sandbox. Sandbox approval is assessed on a case-by-case basis and is not guar- anteed. 1.1.3 Regulation of Blockchain Technology Government and Regulatory Attitude The Indonesian government’s general approach to blockchain and crypto-asset businesses reflects a cautious stance, balancing innovation with consum- er protection. The OJK has progressively expanded the scope of regulation over the digital asset sector, addressing areas such as crypto-asset derivatives and primary market offerings through new, upcoming and amended regulations. Entities that provide finan- cial services in Indonesia using blockchain technology without the requisite licence risk having their platform access blocked in Indonesia, which has been actively enforced against a number of foreign platforms. The regulatory sandbox serves as the primary path- way for blockchain-based innovations that fall out- side existing frameworks. However, sandbox partici- pation does not guarantee regulatory approval, and the absence of a formal framework may mean that businesses are unable to operate lawfully even after sandbox testing, and might need to wait until a more specific regulation regarding blockchain is issued. This illustrates the tension between encouraging inno- vation and the practical constraints of a regulatory environment still developing in response to market developments.
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