INDONESIA Law and Practice Contributed by: Emir Nurmansyah, Monic N. Devina, D. Meitiara P. Bakrie and Ruth A. Mendrofa, ABNR Counsellors at Law
10. Blockchain 10.1 Use of Blockchain in the Financial Services Industry The use of blockchain by incumbent players in Indonesia’s financial sector is growing. In fact, the BI has been a pioneer in leveraging block - chain technology by formulating the country’s own central bank digital currency (CBDC): a digital rupiah pilot programme known as Project Garuda. This is further discussed in 10.2 Local Regulators’ Approach to Blockchain . Some major banks have paved the way for blockchain adoption: Bank Permata, Bank Negara Indonesia (BNI) and Bank Rakyat Indo - nesia (BRI) deploy blockchain for trade finance and remittance products. Bank Central Asia (BCA) initiated a financial hackathon for start- ups to drive growth in the use of blockchain. Some other major banks are reportedly pursu - ing routes to blockchain adoption, including the potential to use blockchain for KYC shared stor - age on blockchain. The authors believe that the leveraging of block - chain technology by traditional players – particu - larly in some aspects of settlements, KYC and financial inclusion – will become more prevalent to keep up with blockchain technology. 10.2 Local Regulators’ Approach to Blockchain There has yet to be a specific rule proposal, let alone legislation, that governs blockchain adoption, although the government continues to welcome this through its technology-neutral approach in general. Within the financial sector, as mentioned in 10.1 Use of Blockchain in the Financial Services Industry , the BI has formu - lated Project Garuda, for which a White Paper was released on 30 November 2022. The digital
• tax and accounting (tax and accounting reporting solutions); and • management of track record information for parties involved in financial offences within the financial services sector. 9.2 Contractual Terms to Assure Performance and Accuracy Subcontracts between duly licensed financial service entities and third parties are generally dictated by regulations. For example, this is the case in banks (commercial and rural banks, including those that are Sharia-compliant) for outsourcing their IT systems. While not specifically applicable to regtech, the OJK mandates specific provisions that must be included for banks to outsource their IT activi - ties, and the contract must contain standard clauses as prescribed by OJK regulations (eg, OJK Regulation No 11/POJK.03/2022 on the Implementation of IT by Commercial Banks, and its implementing regulation, OJK Circular Letter No 21/SEOJK.03/2017). Among the most signifi - cant provisions are those concerning:
• data protection; • confidentiality; • human resources; • IP rights and licences; • systems security standards; • data centres; and • disaster-recovery centres.
Service-level agreements (SLAs) are also man - datory, containing performance standards such as promised service levels and performance targets.
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