OJK Calls Decentralized Finance Potentially Encourage Financial Inclusion

Rupiah (Photo: Antara)

JAKARTA - Decentralized finance (DeFi), which is a blockchain-based financial application ecosystem and can operate without central authority such as banks or other financial institutions. Where, DeFi has the potential to increase financial inclusion.

"OJK views DeFi as a challenge and also an opportunity in the financial ecosystem. DeFi, which operates through blockchain, has the potential to increase financial inclusion, transparency and efficiency," said OJK Banking Supervision Chief Executive Dian Ediana Rae quoting Antara.

Dian said DeFi implementation in Indonesia has the opportunity to develop, especially for people who do not have access to formal banking services or people who want other opportunities and benefits.

Based on the results of the 2024 National Literacy and Financial Inclusion Survey (SNLIK), the current level of financial inclusion in Indonesia is 75.02 percent and the financial literacy index is 65.43 percent.

Meanwhile, through the Blueprint Payment System 2024-2045, Bank Indonesia (BI) targets to bring 91.3 million unbanked and 92.9 million micro, small and medium enterprises (MSMEs) into the economy and formal finance in a sustainable manner through digitalization.

According to Dian, DeFi's development was triggered by the benefits and advantages of blockchain technology that could increase efficiency, flexibility, transparency and accessibility of various financial products.

However, DeFi's decentralized, borderless, and anonymous nature presents risks such as money laundering, terrorist financing, market volatility, and issues regarding consumer protection. In addition, the use of loans through DeFi in Indonesia is still limited in terms of its use.

OJK will continue to pay close attention to DeFi's development, especially for the banking sector, and how it has the potential to distort existing banking institutions.

Although blockchain-based transactions are starting to develop, they are still limited to the investment sector, especially in the form of crypto assets. Other sectors, such as blockchain-based payments or loans, have not been widely accepted in Indonesia considering that cryptocurrencies are not legitimate as a means of payment based on the Indonesian constitution.

Most Indonesians transact through a fiat-based traditional financial system. Therefore, OJK will first focus on studying the impacts and risks of DeFi, as well as gradually exploring the necessary regulatory measures.

In addition, OJK is also aware of the importance of increasing public literacy related to blockchain technology, including conducting transactions within the DeFi ecosystem.

Dian said blockchain technology has now become part of the innovations made by banks in implementing various emerging technologies to support bank business activities, in order to be able to compete in the digital era.

To support the acceleration of digital banking transformation including the implementation of various emerging technology, OJK has issued various roadmaps, guidelines and arrangements, including the Blue Printing of Banking Digital Transformation, Digital Resilience Guideline Book, OJK Regulation (POJK) Number 11 of 2022 concerning the Implementation of Information Technology by Commercial Banks.

Then, there is also the OJK Circular (SEOJK) Number 29 of 2022 concerning Cyber Security and Security for Commercial Banks, and SEOJK Number 24 of 2023 concerning the Assessment of the General Bank's Digital Maturity Level, and in the future, AI Governance Guidelines will also be issued in the Banking Sector.

In addition, the OJK is preparing to shift the task of regulating and supervising digital financial assets and crypto assets from the Commodity Futures Trading Supervisory Agency (CoFTRA) to the OJK.

OJK carries out a series of initiatives, including coordinating with CoFTRA, compiling POJK and SEOJK related to the administration of crypto asset trading, preparing information system infrastructure devices, compiling transition guidebooks and monitoring guidelines, as well as coordinating with all stakeholders in order to strengthen supervision of digital financial assets and crypto assets.