Indonesia’s crypto regulatory landscape is evolving to balance innovation with consumer protection, and these changes will directly impact how Lorenzo Protocol and its competitors are adopted locally. Here’s a detailed breakdown
Key Indonesian Crypto Regulations to Consider
-Commodity Futures Trading Regulatory Agency (Bappebti) Oversight: Since 2019, crypto assets are classified as "commodity derivatives," requiring platforms to register with Bappebti. Only 25 exchanges are currently licensed to operate in Indonesia.
- Bank Indonesia and OJK Guidelines: The central bank prohibits crypto as a payment method, while the Financial Services Authority (OJK) focuses on anti-money laundering (AML) and investor education. In 2025, new rules were proposed to regulate "yield-generating crypto products" like liquid staking.
- Taxation: A 0.1% transaction tax applies to crypto trades, with plans to introduce income tax on staking and yield rewards starting in 2026.
- Consumer Protection: Bappebti mandates that platforms disclose risks clearly and limit leverage – rules that will extend to yield products like LSTs.
Impact on Individual Protocols’ Local Adoption
Lorenzo Protocol
- Opportunities:
- Its institutional-grade compliance tools and structured yield products align with OJK’s focus on regulated investment options. If it partners with licensed Indonesian exchanges (e.g., Indodax, Tokocrypto) to list its tokens, it could attract local institutional investors and high-net-worth individuals looking for secure BTC yield solutions.
- The planned mobile app could be tailored to Indonesian users with Bahasa Indonesia support and simplified onboarding – meeting Bappebti’s requirements for user-friendliness and transparency.
- Risks:
- If its LPT/YAT tokens are classified as "complex financial products," Bappebti may require additional disclosures or restrict access to retail users, limiting adoption scale.
- The upcoming yield tax could reduce demand for its products unless it offers tools to help users track and report earnings easily.
- Competitive Edge: Lorenzo’s focus on security and compliance makes it well-placed to gain trust in Indonesia’s risk-averse market.
Stacks
- Opportunities:
- Its BTC-native dApp ecosystem could appeal to Indonesian developers and users interested in NFTs, gaming, and decentralized applications – segments that are growing rapidly in the country. If it partners with local game studios to launch Bahasa Indonesia-friendly projects, it could build a strong retail user base.
- As a "layer 1 infrastructure," it may face fewer regulatory hurdles than pure yield products, allowing it to expand more freely.
- Risks:
- Bappebti’s ban on crypto as payment could limit adoption of Stacks-based commerce dApps locally.
- NFTs and gaming tokens may be subject to stricter oversight if regulators view them as high-risk, slowing ecosystem growth.
- Competitive Position: Stacks could carve out a niche in the local web3 development space but may struggle to compete with Lorenzo for institutional users.
Babylon Chain
- Opportunities.
- Its cross-chain restaking model could interest Indonesian blockchain projects looking to enhance security using Bitcoin. If it partners with local tech companies or universities to educate stakeholders about restaking benefits, it could build B2B adoption.
- Singapore’s proximity and regulatory alignment with Indonesia could help it expand into the market through cross-border partnerships.
- Risks:
- The proposed rules for yield products may require it to register its restaking services with Bappebti, which could be time-consuming and costly.
- Limited local awareness of restaking technology may slow adoption unless it invests in educational campaigns.
- Competitive Challenge: Babylon will face competition from Lorenzo and local protocols offering simpler yield solutions.
Merlin Chain
- Opportunities:
- Its focus on low-cost transactions and retail DeFi could appeal to Indonesia’s large young population (over 50% under 30) that is increasingly interested in crypto. If it integrates with local e-commerce platforms (e.g., Tokopedia, Shopee) – even as a "reward points" or "loyalty program" tool (since direct crypto payments are banned) – it could drive mass adoption.
- Its zkRollup technology may be viewed favorably by regulators for improving transaction transparency and reducing fraud risks.
- Risks:
- The ban on crypto payments means its plans for e-commerce integration will need to be structured creatively (e.g., converting crypto to fiat at checkout), adding complexity.
- Retail-focused yield farming may be restricted under new rules, limiting its core value proposition for local users.
- Competitive Edge: Merlin could become the most accessible option for Indonesian retail users if it adapts its model to comply with payment restrictions.
Broader Local Adoption Trends & Competitive Shifts
- Partnerships with Licensed Exchanges Will Be Critical: Only protocols listed on Bappebti-licensed platforms can reach Indonesian users. Lorenzo’s planned institutional partnerships could help it secure listings, while Merlin may prioritize retail-focused exchanges.
- Education Will Drive Growth: Regulators and industry players are investing in crypto literacy programs. Protocols that participate in these initiatives (e.g., Lorenzo hosting workshops on secure BTC staking, Stacks training local developers) will build trust and gain market share.
- Localization Is Key: Platforms offering Bahasa Indonesia support, local payment methods for fiat onramps, and products tailored to Indonesian users’ needs (e.g., small-ticket yield options) will have an advantage.
- Regulatory Clarity Will Unlock Growth: If the 2026 rules for yield products provide clear guidelines, it will encourage more protocols to enter the market – but only those that have already prepared for compliance (like Lorenzo) will benefit first.
Protocol Adaptation Plans for Indonesia
- Lorenzo Protocol: Likely to partner with licensed exchanges and local financial advisors to offer compliant yield products, plus develop tools to help users track tax obligations.
- Stacks: May focus on building a local developer community through grants and workshops, while adapting dApps to comply with payment restrictions.
- Babylon Chain: Could target B2B partnerships with Indonesian blockchain projects and use Singapore as a gateway to the local market.
- Merlin Chain: May explore integrating with loyalty programs or microfinance platforms to offer crypto-based rewards without violating payment rules.
In Indonesia, regulatory compliance and localization will be the main drivers of competitive advantage. Lorenzo Protocol is well-positioned for institutional adoption, while Merlin could lead in retail engagement – but all protocols will need to adapt their global strategies to fit Indonesia’s unique regulatory environment.
