By Ataya Felicya

New Regulation: Technological Innovation in the Financial Sector

28 May 2024

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In response to the booming technological innovation in the financial sector in Indonesia, the Financial Services Authority (Otoritas Jasa Keuangan or "OJK") has introduced a regulatory sandbox to ensure data and consumer protection. Despite the efforts to regulate and supervise such sandbox programs, there are still challenges such as unequal business opportunities for the participants and uncertainty surrounding the exit policy.

Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector (“P2SK Law”) sets out a significant enhancement of the role of the OJK in regulating and supervising technological-innovations-related activities in the financial sector, including digital financial assets such as cryptocurrency.

As an implementation of P2SK Law, OJK had issued OJK Regulation No. 3 of 2024 on the Implementation of Technological Innovations in the Financial Sector (Inovasi Teknologi Sektor Keuangan or “ITSK”) (“OJK Reg 3/2024"), revoking the former regulation of ITSK - OJK Regulation No. 13/2018 on Digital Financial Innovation (Inovasi Keuangan Digital or “IKD”).



Previously, ITSK (formerly known as IKD) providers had to undergo regulatory sandboxing and submit registration upon recommendation from OJK. However, OJK Reg 3/2024 introduces several key changes to the licensing requirements for ITSK providers. The new regulation outlines more specific criteria for participants in the sandbox framework, introduces a testing plan and includes comprehensive guidelines for registration and exit policy.

  1. Criteria

    The new regulation sets out more specific criteria for ITSK compared to the former regulation, namely:

    • innovation within the financial services sector;

    • innovation that has elements of novelty and/or significant distinctions from existing ones within the financial sector;

    • innovation that provides benefits, improves services and adds values both to the public and the financial sector;

    • innovation that is ready for testing and development;

    • innovation that requires trial and development support, for which supervision and regulation have not been governed under existing regulations; and

    • any other criteria determined by OJK.

  2. Testing Plan (Rencana Pengujian)

    Business actors seeking to engage in what is arguably a technological innovation in the financial sector and fall within the abovementioned criteria are subject to OJK’s regulatory sandbox. As part of the application process, participants are required to submit a testing plan. The testing plan should cover the description of the product innovation, potential risks, risk mitigation, limitations of the testing and development (e.g., duration of the testing phase, target market and detailed profile of the consumers, number of the consumer and transaction, testing and development’s partner and measurable limitation) consumer protection, exit policy, capital and resources, test and development scenarios and key performance indicators for those scenarios. The plan is necessary to evaluate the participant’s readiness and innovation, as well as the parameters for assessing the success of the ITSK provider during the regulatory sandbox program.

  3. Registration as ITSK Provider and Exit Policy

    After undergoing the regulatory sandbox, OJK will assess and notify the participants of their results.

    Participants who successfully pass the regulatory sandbox will receive a passing letter from OJK, otherwise they will receive a rejection letter. Within six months of receiving such a passing letter from OJK, participants are required to apply for an ITSK license in accordance with the relevant ITSK cluster regulations.

    On the other hand, rejected participants must cease all its business operations and product innovation submitted for testing during the regulatory sandbox, settle all its obligations with all parties involved, and implement the exit policy as outlined in their Testing Plan as mentioned above.


The introduction of OJK Regulation 3/2024 signifies the beginning of a transition in supervising the cryptocurrency sector from the Commodity Futures Trading Supervisory Agency (Badan Pengawas Perdagangan Berjangka Komoditi/ “Bappebti”). As the cryptocurrency industry continues to grow, what was once classified as a commodity is now evolving into a viable payment method.

Previously, the cryptocurrency sector was only regulated by the Bappebti, requiring business actor to obtain the following license to conduct crypto trading business activities: (i) registration certificate from Bappebti; and (ii) registration of Electronic System certificate from the Ministry of Communication and Information.

Interestingly, OJK Reg 3/2024 indicates that providers who carry out technological innovations that impact cryptocurrency activities are also entitled to sandboxing and apply for registration to OJK.

P2SK Law and OJK Reg 3/2024 aim to reinvent the financial sector licensing regime, which hopefully will lead to a market-tailored policy that balances consumer protection and legal certainty without stifling innovation and development. Therefore, businesses in the financial and tech sectors must adhere to this new issuance regulation when entering the industry.

Please feel free to contact us if you have any queries or would like us to assist you with any aspects of compliance with OJK Reg 3/2024.


By: Harri Hazwar and Ataya Felicya


This material is prepared for general information purposes only. It is not intended to give legal or any other professional advice, opinion or recommendation and, accordingly, it should not be relied upon. Specific legal advice should be sought before taking any action based on the contents in this material. Please contact us if you need any assistance regarding this matter.

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Ataya Felicya


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