Indonesia Debates Crypto Sovereignty as Landmark Financial Law Faces Revision

JAKARTA, Investortrust.id — The Indonesian Parliament is locked in a high-stakes debate over the future of the nation’s digital asset landscape, as lawmakers weigh a proposed revision to the landmark Financial Sector Development and Reinforcement Law (UU P2SK). The potential changes threaten to upend the business models of dozens of domestic exchanges, prompting concerns about the long-term viability of the local digital ecosystem.

While the original UU P2SK was the first to mandate the transfer of crypto oversight to the Financial Services Authority (OJK), these new revisions seek to further codify the market structure to create a more "sovereign" domestic environment. However, industry leaders warn that if the resulting regulatory framework is too restrictive, it could inadvertently trigger a massive capital flight to global platforms, undermining the very sovereignty the government aims to protect.

The Push for Liquidity Consolidation

At the heart of the legislative push is an effort to end Indonesia’s reliance on global liquidity pools. Mukhamad Misbakhun, Chairman of Commission XI of the House of Representatives (DPR), argues that the current structure—where local exchanges often mirror international order books—is inefficient and leads to significant capital outflows.

"The goal of this revision is to provide certainty for consumer protection at the highest level of regulation—the law itself," Misbakhun said in a recent interview. He contends that by aggregating liquidity into a single, deep local order book, Indonesia can achieve its own price discovery and enhance the global competitiveness of its domestic industry. "We are consolidating liquidity that was previously scattered. The result? Local industry competitiveness increases and dependence on foreign markets decreases."

The proposed framework introduces a strict separation of powers, mirroring traditional financial markets. Under the new law, the ecosystem would be split between four distinct entities: the exchange (where trading happens), the clearing house (which ensures transactions are settled), the custodian (where assets are stored), and the digital asset traders (PAKD).

Industry Alarm: A Potential Death Knell?

While lawmakers frame the changes as an upgrade for consumer protection and market maturity, the private sector is raising the alarm. Hamdi Hassyarbaini, CEO of the exchange Bitwewe, warns that the current draft remains "multi-interpretational" and could potentially wipe out the 25 registered digital asset traders currently operating in the country.

The primary concern lies in how the role of the national crypto exchange (Bursa) is defined. Hassyarbaini outlines a worst-case scenario where the central exchange takes over the trading process entirely, allowing customers to bypass local brokers.

"This is the most risky," Hassyarbaini told Investortrust. "If the interpretation is that the exchange takes full control and customers trade directly through their system, PAKD loses all sources of income and could potentially go out of business."

Hassyarbaini noted that because the crypto industry is inherently borderless, any move that weakens the domestic ecosystem will simply drive investors back to offshore giants like Binance or Coinbase. "If the national ecosystem is weakened, transactions will move abroad. The state will actually lose potential taxes and oversight," he added.

Transparency and the "Sovereign" Mandate

Lawmakers, however, appear undeterred by the industry's anxiety. Misbakhun argues that the current lack of transparency—where traders often buy assets on behalf of consumers without clear individual attribution—poses a systemic risk. The new regulation would require every transaction to be clearly identified by its ultimate owner and source of funds, treating crypto with the same rigor as banking assets.

"Investors should only have to face market risks in the form of price fluctuations," Misbakhun noted. "They should not have to bear the risk of being hacked or scammed. That is what we want to minimize."

As the Working Committee (Panja) in the DPR continues its deliberations, the 25 active members of the CFX Bursa—including major players like Pintu, Tokocrypto, and Indodax—are lobbying for a more cautious approach. They argue that while consumer protection is vital, the "sovereignty" the government seeks may be lost if the very companies built to support the local market are regulated into extinction.