Indonesia Prepares Unique Identification System for Crypto Investors
Indonesia is on the verge of a significant reform that could fundamentally reshape its domestic crypto market by introducing a single investor identification (SID) system for digital assets. This new framework, currently being finalized by the Financial Services Authority (OJK), will assign a unique identity to each crypto investor, standardizing their presence across various platforms. The reform is being championed as a way to enhance oversight and strengthen investor confidence, yet it has also raised important questions regarding data security and the risks associated with centralization. According to Hasan Fawzi, OJK’s chief executive for financial technology and crypto oversight, the SID system will lead to greater transparency in transactions and eliminate the possibility of duplicate identities. The OJK is still conducting a comprehensive review before the system’s implementation, and in the preparatory phase, it will carry out a “data cleansing” process and repeat Know-Your-Customer (KYC) checks to guarantee the uniqueness of every investor’s identity. Afterward, the agency will collaborate with industry participants to design the system and select a qualified operator. Options under consideration include a collectively managed SID system under independent supervision or a system delegated to an officially mandated crypto exchange, ensuring a systematic and well-governed approach to the market’s future.
Strengthening Market Oversight and Investor Trust
The introduction of the SID system is a crucial step towards aligning crypto oversight more closely with Indonesia’s conventional capital markets, where investor IDs are already a standard practice. For an industry that has long struggled with a reputation for being associated with money laundering and cybercrime, this new level of scrutiny is expected to significantly help in restoring its credibility. Thimotius Martis, the chief marketing officer at Pintu, a local exchange, believes that with a unified SID system, government bodies will be able to trace funds more easily across platforms, which will ultimately allow for swifter and more effective enforcement actions. This is particularly relevant as Indonesia’s crypto market continues to grow, with the number of investors reaching 15.9 million by June 2025, a 5.2% increase from the previous month, as reported by OJK. Despite this growth in investor numbers, trading volumes have shown volatility, slipping to Rp 32.3 trillion in June from Rp 49.6 trillion in May, highlighting the ongoing need for market stabilization and deeper liquidity. Total transactions for the year have reached Rp 224.1 trillion, a number that still pales in comparison to the country’s capital market, which boasted a record 17 million investor SIDs in July.
Benefits and Risks of Market Centralization
The move has been largely welcomed by key players in the industry, with Indodax chief executive William Sutanto stating that a unified SID would bring crypto regulation closer to capital-market standards and significantly improve investor protection. For long-term participants, this centralization could help reduce systemic risk and attract more institutional capital, thereby deepening market liquidity and smoothing out the sharp price swings that have characterized the sector. However, this centralization also carries its own set of risks. Sutanto cautioned that combining SID and KYC systems could create a single point of failure, warning that “If there is a breakdown, the entire market could be affected.” A major data breach could easily erode the very trust that regulators are hoping to build. Indonesia’s initiative is part of a broader global trend, as other governments are also pursuing similar measures. The European Union’s Markets in Crypto-Assets (MiCA) regulation is set to impose stricter verification and disclosure rules in 2025, and Singapore already has tough licensing requirements for exchanges. Some industry figures, like Tokocrypto’s CMO Wan Iqbal, have even called for the SID system to be expanded beyond crypto to include banking and other financial sectors. A cross-sector identity system would streamline onboarding and reduce friction across various asset classes, more firmly integrating crypto into the national financial system.
