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LEGAL PROTECTION FOR CRYPTO ASSET CUSTOMERS IN INDONESIA 2024
Setyawati Fitrianggraeni, Aga Kristiana Silaen, Irvena A. Dewanto*
Introduction
Cryptocurrency is a digital currency that uses blockchain technology and cryptography systems to facilitate secure and anonymous transactions.[1] Recently, the popularity of cryptocurrency transactions by the public has escalated.[2] Furthermore, crypto investment is characterized by having a high risk and high return where its users can easily obtain a large amount of profits, but may also experience a large amount of losses.[3] Despite the growing interest and engagement in cryptocurrency transactions among the public, Indonesia’s current legal framework lacks comprehensive protections for crypto asset investors. This legal gap leaves consumers vulnerable to significant financial losses, market manipulation, and fraudulent activities, as existing regulations do not fully address the high-risk nature of cryptocurrency investments.[4] With the soaring prevalance of cryptocurrency transactions, it is pertinent to establish a rigid legal protection system, especially for cryptocurrency investors, in order to avoid various potential losses that may occur.
Legal Status of Crypto Assets in Indonesia
Currently, crypto assets are not recognized as a currency in Indonesia. This is based on Article 1 number 1 of Law Number 7 of 2011 concerning Currency as amended by Law Number 4 of 2023 (“Currency Law“) which stated that, “The currency of the Unitary State of the Republic of Indonesia is the Rupiah”. However, the existence of crypto assets as a tradable commodity is recognized through the Commodity Futures Trading Supervisory Agency of the Republic of Indonesia or “Badan Pengawas Perdagangan Berjangka Komoditi” (“Bapeppti“) Regulation Number 8 of 2021 concerning Guidelines for the Implementation of Physical Market Trading of Crypto Assets on the Futures Exchange as amended by Bapeppti Regulation Number 13 of 2022 (“Bappebti Regulation 8/2021“). Article 1 number 7 of Bappebti Regulation 8/2021 defines Crypto Asset as, “An intangible commodity that is digital, uses cryptography, technological information networks, and distributed ledgers, to regulate the creation of new units, verify transactions, and secure transactions without the intervention of other parties”. The statement above defines crypto assets as digital, intangible commodities that rely on cryptography, digital networks, and distributed ledgers (like blockchain) for security and transaction verification. These technologies enable crypto assets to function in a decentralized way, meaning transactions can occur directly between users without the need for intermediaries like banks. This decentralized structure, made possible by cryptography and blockchain, ensures that transactions are transparent, secure, and resistant to tampering. In addition, crypto assets can only be traded in Indonesia through physical crypto asset traders who have obtained approval from the Head of Bappebti to carry out transaction activities related to Crypto Assets on their own behalf and/or facilitate Crypto Asset Customers.[5] This approach reflects a cautious stance on crypto assets. By classifying crypto assets as commodities and restricting their trade to approved entities, the government aims to balance the growth of this new digital market with the need to protect consumers. Such a framework helps reduce the risk of fraud, loss, and instability, providing a safer environment for those interested in trading crypto assets. Overall, Indonesia’s regulatory approach prioritizes stability and security, acknowledging the potential of crypto assets while placing limits on their integration into the mainstream financial system.[6]
Risks in Crypto Asset Transactions
Crypto asset transactions are activities that are vulnerable to cybercrime, [7] among others, hacking, scamming, cracking, sniffing, and spoofing.[8] Additionally, virtual money laundering through cryptocurrencies has rampantly occurred.[9] Further, hacking that occurs in cryptocurrencies can be in the form of theft of crypto coins in the user’s wallet. A wallet is defined as a special application for storing crypto coins, while users are investors who invest in crypto investments.[10] Crypto wallet functions as a secure, encrypted software application designed to store and manage digital currencies, such as Bitcoin or Ethereum. This wallet does not contain physical currency; rather, it securely holds the cryptographic keys necessary for accessing and transferring crypto assets on the blockchain. User’s balances in various cryptocurrencies are displayed within the wallet interface, with each asset represented by a corresponding digital icon and balance amount.[11]
In this regard, a salient aspect that must be considered in the implementation of crypto asset trading is legal protection for crypto asset customers, including personal data aspects.
Legal Protection for Crypto Asset Customers in Indonesia
Currently, provisions regarding online cryptocurrency transactions are regulated in Law Number 11 of 2008 concerning Information and Electronic Transactions as amended by Law Number 19 of 2016 and Law Number 1 of 2024 (“IET Law”). Based on Article 1 number 2 of the IET Law, “Electronic Transactions are legal acts carried out using Computers, Computer networks, and/or other electronic media”. With respect to data protection, Article 26 of the IET Law stipulates that unless otherwise specified by laws and regulations, the use of any information through electronic media concerning a person’s personal data must be carried out with the consent of the concerned party.[12] In this regard, personal rights refers to:[13]
- the right to enjoy a private life and be free from all kinds of distractions.
- the right to be able to communicate with others without acts of spying.
- the right to supervise access to information regarding a person’s personal life and data.
Additionally, any person whose rights are infringed may file a lawsuit for damages incurred under the IET Law.[14]
Furthermore, the IET Law includes hacking as one of the prohibited acts under Chapter VII. Article 30 of the IET Law stipulates that, “Every Person knowingly and without rights or unlawfully accesses another Person’s Computer and/or Electronic System in any way”.[15]
Furthermore, crypto asset customers are included as consumers as regulated under Law Number 8 of 1999 concerning Consumer Protection (“Consumer Protection Law”). Based on Article 1 number 2 of the Consumer Protection Law, “Consumers are every person who uses goods and/or services available in society, either for the benefit of themselves, their families, other people or other living beings and not for trading”. Moreover, consumer protection refers to efforts that ensure legal certainty to provide protection to consumers.[16] The form of protection provided for crypto asset customers is the obligation of business actors to provide compensation to customers. Based on Article 19 paragraph (1) of the Consumer Protection Law, “Business actors are responsible for providing compensation for damage, pollution, and/or consumer losses due to consuming goods and/or services produced or traded”.
Furthermore, based on Article 17 of Bappepti Regulation 8/2021, in order to obtain approval as the Manager of a Crypto Asset Depository on the Crypto Asset Physical Market, in addition to meeting the requirements as stipulated in the Bappebti Regulation which regulates the implementation of Commodity physical market trading on the Futures Exchange, one of the requirements that must be met by the Manager of a Crypto Asset Depository is to have a Standard Operating Procedure (SOP) which at leasts regulates the following:[17]
- storage and listing mechanisms for Crypto Assets (cold storage and hot storage);
- the mechanism of the process for Crypto Assets to enter and exit;
- security surveillance mechanism;
- internal control; and
- Crypto Asset maintenance mechanism;
In addition, there must also be at least 1 (one) employee who is a Certified Information Systems Auditor (CISA) and 1 (one) employee who is a Certified Information Systems Security Professional (CISSP), or has cooperation with institutions that have experts or directly cooperates with experts who are Certified Information Systems Auditor (CISA) and Certified Information Systems Security Professional (CISSP) in the context of supervision and security of Crypto Asset trading on Physical Traders of Crypto Assets.[18]
See the table here.
| Regulation | Relevant Articles | Scope of Protection | Implications for Crypto Asset Customers |
| IET Law (Law No. 11 of 2008, amended by Law No. 19 of 2016 and Law No. 1 of 2024) | Article 1, Number 2 | Defines “Electronic Transactions” as legal acts carried out using electronic media. | All activities related to Crypto Asset categorised as electronic transactions. |
| Article 26 | Protection of personal data and privacy rights. | Requires consent for the use of personal data, allowing crypto asset customers to protect their data from unauthorized use. | |
| Article 30 | Prohibition of unauthorized access (hacking). | Criminalizes hacking, offering protection to crypto asset customers from unauthorized access to their crypto wallets and exchanges. | |
| Consumer Protection Law (Law No. 8 of 1999) | Article 1, Number 2 | Defines “Consumers” as those using goods/services not for trading purposes. | Recognizes crypto asset customers as consumers, entitling them to consumer rights and protections. |
| Article 19, Paragraph 1 | Business actors’ responsibility to compensate consumers for damages or losses. | Mandates that crypto service providers compensate customers for damages arising from faults in their services, enhancing consumer protection for crypto asset customers. | |
| Bappebti Regulation 8/2021 | Article 17 | Requirements for managing crypto asset depositories on the physical crypto market. | Imposes strict operational standards (e.g., secure storage, access controls, internal audits) to protect crypto assets, benefiting customers by ensuring a higher level of asset security. |
| Certified information security and audit personnel requirements (CISA and CISSP certifications). | Requires the presence of certified security experts in crypto trading platforms, improving the security framework for crypto asset trading and storage. |
Conclusion
Overall, the legal protection for crypto asset customers in Indonesia reflects a solid framework that addresses key concerns such as consumer rights, data protection, and cybersecurity.[19] It shows that Indonesia is taking a proactive stance in regulating this emerging sector while aiming to protect consumers and ensure the integrity of the market. However, as the market continues to grow, ongoing updates to the legal framework and consumer education will be critical for maintaining a safe and transparent environment.
References
Journal Articles
Ittay Eyal. On Cryptocurrency Wallet Design. In 3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021). Open Access Series in Informatics (OASIcs), Volume 97, pp. 4:1-4:16, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2022)
https://doi.org/10.4230/OASIcs.Tokenomics.2021.4
Imam Haryanto et al., “Transformation of Capital Market Law Towards Omnibus Law as The Acceleration of The Nation ’ s Economy,” no. June (2021), https://doi.org/10.5281/zenodo.4975186 in Muhammad Alhadi Murizqy, Rianda Dirkareshza, ‘Peninjauan Aspek Keamanan dan Perlindungan Hukum Terhadap Investor Cryptocurrency’ (2022) 7 (2) Jurnal Ius Constituendum http://dx.doi.org/10.26623/jic.v7i2.4067 accessed 14 October 2024.
Muh Iqbal, Salim HS, and Lalu Wira Pria Suhartama, “Legal Protection for Digital Currency Investment Activities according to Positive Law in Indonesia” (2024) 9 (3) RESEARCH REVIEW International Journal of Multidisciplinary <https://doi.org/10.31305/rrijm.2024.v09.n03.015> accessed 10 November 2024.
Meliza, Julia, Isfenti Sadalia, ‘Cryptocurrency’ (2021) 1 (3) Journal of Trends Economics and Accounting Research https://journal.fkpt.org/index.php/jtear/article/view/131 accessed 14 October 2024.
Sam, Yolanda Adelia Bella Lestari, Messy Rachel Mariana Hutapea, Suyudi Setiawan, ‘Legalitas Cryptocurrency Dalam Tindak Pidana Kejahatan Pencucian Uang’ (2022) 18 (1) Jurnal Ilmu Hukum https://doi.org/10.30996/dih.v0i0.6043 accessed October 14, 2024.
Farrel Christian Sioe, Putu Edgar Tanaya, “Regulasi Hukum Cryptocurrency Dan Pencegahan Tindak Penyalahgunaannya Di Indonesia” (2024) 12 (6) Kertha Semaya : Journal Ilmu Hukum, accessed 10 November 2024.
Stephen Chan et al., “Blockchain and Cryptocurrencies,” Journal of Risk and Financial Management 13, no. 10 (2020), https://doi.org/10.3390/jrfm13100227 in Murizqy, Dirkareshza, ‘Peninjauan Aspek Keamanan dan Perlindungan Hukum Terhadap Investor Cryptocurrency’.
Subhan, Muhammad, Dr. Hariyanto, S.H., M.Kn., ‘Perlindungan Hukum bagi Pengguna Cryptocurrency Ditinjau Berdasakan Undang-Undang yang Berlaku di Indonesia’ (2022) Gadjah Mada University Faculty of Law Undergraduate Thesis https://etd.repository.ugm.ac.id/penelitian/detail/213036 accessed October 14, 2024.
Wahyu Beny Mukti Setiawan, Erifendi Churniawan, and Femmy Silaswaty Faried, “Upaya
Regulasi Teknologi Informasi Dalam Menghadapi Serangan Siber (Cyber Attack) Guna Menjaga Kedaulatan Negara Kesatuan Republik Indonesia,” Jurnal Usm Law Review 3, no. 2 (2020), https://doi.org/10.26623/julr.v3i2.2773 in Murizqy, Dirkareshza, ‘Peninjauan Aspek Keamanan dan Perlindungan Hukum Terhadap Investor Cryptocurrency’.
Laws and Regulations
Bapeppti Regulation 8/2021 as amended by Bappepti Regulation 13/2022
Consumer Protection Law
Information and Electronic Transaction Law
Others
BANK INDONESIA, “Project Garuda: Navigating the Architecture of Digital Rupiah” <https://www.bi.go.id/en/rupiah/digital-rupiah/Documents/White-Paper-CBDC-2022_en.pdf > accessed 7 November 2024.
Footnotes
[1] Imam Haryanto et al., “Transformation of Capital Market Law Towards Omnibus Law as The Acceleration of The Nation ’ s Economy,” no. June (2021), https://doi.org/10.5281/zenodo.4975186 in Muhammad Alhadi Murizqy, Rianda Dirkareshza, ‘Peninjauan Aspek Keamanan dan Perlindungan Hukum Terhadap Investor Cryptocurrency’ (2022) 7 (2) Jurnal Ius Constituendum http://dx.doi.org/10.26623/jic.v7i2.4067 accessed 14 October 2024.
[2] Julia Meliza, Isfenti Sadalia, ‘Cryptocurrency’ (2021) 1 (3) Journal of Trends Economics and Accounting Research https://journal.fkpt.org/index.php/jtear/article/view/131 accessed 14 October 2024.
[3] Stephen Chan et al., “Blockchain and Cryptocurrencies,” Journal of Risk and Financial Management 13, no. 10 (2020): 227, https://doi.org/10.3390/jrfm13100227 in Murizqy, Dirkareshza, ‘Peninjauan Aspek Keamanan dan Perlindungan Hukum Terhadap Investor Cryptocurrency’, 278.
[4] Muh Iqbal, Salim HS, and Lalu Wira Pria Suhartama, “Legal Protection for Digital Currency Investment Activities according to Positive Law in Indonesia” (2024) 9 (3) RESEARCH REVIEW International Journal of Multidisciplinary <https://doi.org/10.31305/rrijm.2024.v09.n03.015> accessed 10 November 2024.
[5] Bappebti Regulation 8/2021, Article 1 number 8.
[6] Farrel Christian Sioe, Putu Edgar Tanaya, “Regulasi Hukum Cryptocurrency Dan Pencegahan Tindak Penyalahgunaannya Di Indonesia” (2024) 12 (6) Kertha Semaya : Journal Ilmu Hukum, accessed 10 November 2024.
[7] Murizqy, Dirkareshza, ‘A Review of Security Aspects and Legal Protection of Cryptocurrency Investors’, 282.
[8] Muhammad Subhan, Dr. Hariyanto, S.H., M.Kn., ‘Legal Protection for Cryptocurrency Users Reviewed Based on Applicable Laws in Indonesia’ (2022) Gadjah Mada University Faculty of Law Undergraduate Thesis https://etd.repository.ugm.ac.id/penelitian/detail/213036 accessed October 14, 2024.
[9] Yolanda Adelia Bella Lestari Sam, Messy Rachel Mariana Hutapea, Suyudi Setiawan, ‘Legality of Cryptocurrency in Money Laundering Crimes’ (2022) 18 (1) Journal of Legal Sciences https://doi.org/10.30996/dih.v0i0.6043 accessed October 14, 2024.
[10] Wahyu Beny Mukti Setiawan, Erifendi Churniawan, and Femmy Silaswaty Faried, “Information Technology Regulation Efforts in Facing Cyber Attacks to Maintain the Sovereignty of the Unitary State of the Republic of Indonesia,” Usm Law Review Journal 3, no. 2 (2020): 275,https://doi.org/10.26623/julr.v3i2.2773
https://doi.org/10.26623/julr.v3i2.2773 in Murizqy, Dirkareshza, ‘Review of Security Aspects and Legal Protection for Cryptocurrency Investors’, 282.
[11] Ittay Eyal, “On cryptocurrency wallet design” In 3rd International Conference on Blockchain Economics, Security and Protocols (Tokenomics 2021), Open Access Series in Informatics (OASIcs), Volume 97, pp. 4:1-4:16, Schloss-Dagstuhl-Leibniz Zentrum für Informatik (2022), p 4-5.
[12] ITE Law, Article 26 paragraph (1).
[13] Ibid, Explanation of Article 26 paragraph (1).
[14] Ibid, Article 26 paragraph (2).
[15] Ibid, Article 30 paragraph (1).
[16] Consumer Protection Law, Article 1 number 1.
[17] Bappepti Regulation 8/2021, Article 17 letter e.
[18] Ibid, Article 17 letter f.
[19] BANK INDONESIA, “Project Garuda: Navigating the Architecture of Digital Rupiah” < https://www.bi.go.id/en/rupiah/digital-rupiah/Documents/White-Paper-CBDC-2022_en.pdf > accessed 7 November 2024.
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