In its aim to attract more investors, the Indonesian government has been reforming many laws and regulations since 2020. The wide-ranging Omnibus Law, which amends approximately 78 laws and regulations, was presented in 2020, the Tax Harmonization Law in 2021.

The government now has its sights set on the financial sector. The House of Representatives approved a draft regulation, Development and Strengthening of the Financial Sector1 on 15 December 2022 (“New Law”), and its key features will be discussed here.

Crypto Assets

Crypto assets2 were previously under the authority of the Commodity Futures Trading Regulatory Agency (“Bappebti”) but were repositioned to fall within Financial Services Authority (“OJK”) control. The New Law stipulates a two-year transition for the full transfer, and further amendments are expected under the OJK.

Digital Currency

The New Law introduces the concept of digital Rupiah via an amendment to Law No. 7 of 2011 on Currency. Management of digital Rupiah will fall within the sole authority of Bank Indonesia (“BI”).


The New Law introduces the concept of bullion activities, which are related to the deposit, financing, trading, and safekeeping of gold. These activities will also fall under the supervision of the OJK.


A few of the key amendments to banking rules and regulations are:

a. Rural Banks (Bank Perkreditan Rakyat, “BPR”)

    • The name ‘BPR’ is changed to Public Economic Bank (Bank Perekonomian Rakyat).
    • In line with its change of name, BPR activities previously limited to savings and financing now include foreign exchange and fund transfers.
    • The New Law stipulates that only a limited liability companies or cooperatives may own shares in BPR. For existing non-limited liability companies or cooperatives, the New Law stipulates a three-year deadline to adjust their constitutional setup for compliance.
    • BPR may now make an initial public offering (under terms and conditions stipulated by the OJK).

b. Spin-off of a Sharia Unit

As with the prevailing laws, the New Law requires a commercial bank with a Sharia Business Unit (UUS) to hive it off as a Sharia bank. The key difference between the New Law and the prevailing law is the spin-off deadline: Law No. 21 of 2008 on Sharia Banks required the spin-off to be completed by the end of June 2023. However, a deadline is no longer stipulated in the New Law (which seems to imply one is no longer applicable unless it were reinstated by the OJK).

New Task for LPS

The Deposit Insurance Corporation (LPS), which was mandated to act as guarantor for customer deposits, now has additional responsibilities under the New Law. It also mandates the LPS to act as insurance policy guarantor and to resolve issues (post license revocation), following OJK disciplinary action.

Extension of BI Obligations

BI is mandated to maintain Rupiah exchange and inflation rates. The New Law adds support for sustainable economic growth to BI’s obligations, stipulating that BI may participate in the sale and purchase of Government or other trusted securities on the secondary market.
Capital Market

a. Initial Public Offering

The New Law shortens the period for a registration statement to become effective. Previously, a statement would become effective within 45 days of the OJK deeming an application complete. The New Law stipulates that a statement would become effective on the 20th business day after the OJK has deemed an application complete (or earlier, should OJK stipulate otherwise).

b. Securities Companies

    • The New Law requires securities companies to keep separate the activities of investment managers from those of underwriters/broker-dealers, in order to minimize potential for conflicts of interest. The New Law stipulates a one-year grace period for securities companies that currently act as underwriter, broker-dealer or investment manager to separate their investment manager activities.
    • The New Law introduces the concept of ‘single presence policy’ for securities companies. A shareholder of a securities company is now prohibited from owning the shares of or controlling more than one securities company. The New Law provides a three-year grace period for these shareholders to comply.


The New Law differentiates between cooperatives that must be licensed by the Ministry of Cooperatives and Small and Medium Enterprises (MenkoUKM), and those by the OJK. Before the New Law, all cooperatives were licensed by the MenkoUKM. The New Law now requires certain cooperatives that: (i) collect funds and disburse loans to third parties other than their members, (ii) obtain financing from a bank or other financial institution that exceeds the maximum permitted amount, or (iii) engage in activities other than savings and loans, to be under the supervision of the OJK (as it is for other financial institutions).

Financial Sector Technology Innovation (ITSK)

The New Law defines ITSK as technology-based innovation that impacts products, activities, services and business models in the digital financial ecosystem. ITSK includes payment systems, settlement of securities transactions, risk management, market support, and activities related to digital financial assets, including crypto assets.

The New Law stipulates that a party, unlicensed for Indonesia, that operates ITSK activities, is liable to 5-10 years’ imprisonment and fines of up to Rp1 trillion (approx. USD 64 million). These sanctions are aimed at shutting down the operation of unlicensed (illegal) financial technology companies.

Bankruptcy Filing of Financial Institutions

The New Law establishes streamlined guidelines for institutions that have authority to file a petition for bankruptcy (or suspension of payments) against financial institutions. In essence, the authorized institutions: (i) license, or (ii) supervise such entities, as summarized below:

a. OJK is authorized to file for bankruptcy (or a suspension of payments petition) for banks, securities companies, stock exchanges, alternative market operators, clearing and guarantee institutions, depository and settlement institutions, organizers of investor protection funds, insurance companies, pension funds, financial institutions, microfinance institutions, crowdfunding service providers, and other financial service institutions that are under OJK authority.

b. BI is authorized to file for bankruptcy (or a suspension of payments petition) for payment system infrastructure providers, payment service providers, providers of rupiah currency processing services, money market brokerage firms, providers of trading facilities, clearing facilities for over-the-counter interest rate and exchange rate derivative transactions, and other institutions under its supervision.

The New Law also stipulates that the assets of electronic money issuers does not include funds separated by the issuer to perform its obligations to users.

New Supervisory Institution

To provide the same treatment as for BI, the New Law mandates the establishment of a new supervisory institution to overview the OJK and LPS. This should assist the House of Representatives in its supervision of both the OJK and LPS.


As the world changes apace, the government is keeping abreast of developments by issuing new and updating existing regulations. The government states that the New Law aims to encourage the contribution of the financial sector to be inclusive, sustainable and foster fair economic growth to improve people's lives, reduce economic inequality, and realize a prosperous, advanced and dignified nation.

An example of fair economic growth is the New Law’s expansion of BPR’s activities. The government hopes that BPR can assist small and medium enterprises to develop their business and contribute to growing the Indonesian economy.

The changes introduced by the New Law will rely on implementing regulations to flesh out missing detail. One major change will affect the crypto market. As authority will now fall within the ambit of the OJK, it will need to amend existing crypto asset regulations to ensure consistency with those for other financial sectors.

The government has responded, via ITSK, to the urgent need to address unlicensed fintech companies that operate in Indonesia. It previously controlled unlicensed entities, including illegal FinTech businesses, via its Investment Alertness Task Force. With ITSK now an integral part of the New Law, the government now has much sharper teeth to deal with unlawful activities of unlicensed entities.


1Rancangan Undang-undang Pengembangan dan Penguatan Sektor Keuangan
2A crypto asset is defined as an intangible, digital commodity that relies on cryptography, peer-to-peer network, and distributed general ledgers to regulate the creation of new units, verify transactions, and secure transactions without interference from other parties.


*Disclaimer: This publication is published under the latest draft of the New Law that was shared on 15 December 2022. The content is subject to alteration upon issuance of the final draft of the law once it is promulgated.

Freddy Karyadi
Lawyer and Member of Indonesia Fintech Association’s Board of Ethics
Tel: +62 818 103 949

Anastasia Irawati
Lawyer and Alumni of New York University