Mechanism for Regulatory Sandbox and Innovation Development

To:

1. Parties intending to submit an application to become a Participant in the regulatory sandbox/innovation development as a Financial Sector Technology Innovator; and
2. Participants in the regulatory sandbox/innovation development as a Financial Sector Technology Innovator,

at your location.

COPY

CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA NUMBER 5/SEOJK.07/2024

CONCERNING

MECHANISM FOR REGULATORY SANDBOX AND INNOVATION DEVELOPMENT

In view of the implementation of Financial Services Authority Regulation Number 3 of 2024 concerning the Implementation of Financial Sector Technology Innovation (State Gazette of the Republic of Indonesia Year 2024 Number 5/OJK, Supplement to the State Gazette of the Republic of Indonesia Number 73/OJK), it is necessary to regulate the implementation provisions regarding the mechanism for regulatory sandbox and innovation development in this Circular Letter of the Financial Services Authority as follows:

I. GENERAL PROVISIONS

In this Circular Letter of the Financial Services Authority, the following terms are defined:

1. Financial Sector Technology Innovation, hereinafter abbreviated as ITSK, is technology-based innovation that impacts products, activities, services, and business models within the digital financial ecosystem.

2. Consumer means any person who owns and/or utilizes products and/or services provided by financial sector business actors.

3. ITSK Organizer means any party organizing ITSK.

4. Regulatory Sandbox/Innovation Development, hereinafter referred to as Sandbox, is a facility and mechanism provided by the Financial Services Authority to facilitate the testing and development of innovations to assess the feasibility and reliability of ITSK.

5. Sandbox Participant, hereinafter referred to as Participant, means a party that has obtained approval from the Financial Services Authority to participate in the Sandbox.

6. Board of Directors means the company organ authorized and fully responsible for managing the company for the interests of the company, in accordance with the company's purpose and objectives, and representing the company, both inside and outside court, in accordance with the articles of association for companies in the form of limited liability companies or equivalent, or equivalent to the Board of Directors for companies in other legal entity forms.

7. Board of Commissioners means the company organ tasked with conducting general and/or specific supervision in accordance with the articles of association and providing advice to the Board of Directors for companies in the form of limited liability companies or equivalent, or equivalent to the Board of Commissioners for companies in other legal entity forms.

8. Testing Plan means the plan for testing and innovation development created by the Participant as the basis for implementing the Sandbox process.

II. PURPOSE OF THE SANDBOX

The Financial Services Authority organizes the Sandbox with the purpose of ensuring that innovation and technology development in the financial sector are conducted responsibly with good risk management.

III. SCOPE OF THE SANDBOX

The scope of the Sandbox includes:

1. provision of facilities to conduct tests carried out within a limited timeframe and environment, including the implementation of testing and innovation development for digital-based products, activities, services, and/or business models in the financial services sector conducted by the Participant within a limited timeframe and environment;

2. provision of facilities to obtain explanations regarding applicable regulations in the financial services sector, including consultation with the Financial Services Authority regarding the organization of ITSK covering the Sandbox process, innovation development in the financial services sector, applicable regulations in the financial services sector, and other topics related to the organization of ITSK;

3. provision of facilities to develop ITSK at the early stage, including mentoring for prospective Participants in accelerating the development of technology innovations and business models that can be widely used in the financial services sector; and

4. provision of other facilities in the context of testing and developing ITSK, including:
   a. organizing events that bring together the digital financial ecosystem with relevant parties for the development of financial sector technology innovations; and/or b. providing data and other information needed for the testing and development of financial sector technology innovations in accordance with applicable legislation.

IV. PARTICIPATION IN THE SANDBOX

1. Prospective Participants intending to participate in the Sandbox must submit an application to become a Participant to the Financial Services Authority.

2. Prospective Participants that are Licensed Financial Institutions (LJK) must obtain a recommendation from the relevant supervisor at the Financial Services Authority.

3. The Financial Services Authority has the authority to require parties organizing ITSK to submit an application to become a Participant to the Financial Services Authority.

4. Parties organizing ITSK as referred to in item 3 are parties that have products, activities, services, and/or business models not yet regulated in the financial sector, provide added value to Consumers and the public, and/or have risk impacts on the financial sector.

V. PROCEDURE FOR APPLICATION TO BECOME A PARTICIPANT

1. Prospective Participants submit an application to become a Participant to the Financial Services Authority by submitting the Application Form to Become a Sandbox Participant signed by members of the Board of Directors as set forth in Annex I Part A, which is an integral part of this Circular Letter of the Financial Services Authority.

2. The Application Form as referred to in item 1 is accompanied by:
   a. the Sandbox Testing Plan as set forth in Annex I Part B; and b. the Cover Letter for Application to Become a Sandbox Participant signed by members of the Board of Directors of the prospective Participant as set forth in Annex I Part C, which is an integral part of this Circular Letter of the Financial Services Authority.

3. Application documents as referred to in items 1 and 2 are submitted online through the Financial Services Authority's electronic system.

4. In the event that the Financial Services Authority's electronic system as referred to in item 3 is unavailable and/or experiences disruption, the submission of the application to become a Participant is submitted in the form of electronic documents via email to mailingroomsumitro@ojk.go.id and OJKSandbox@ojk.go.id or other addresses designated by the Financial Services Authority.

5. In the event that the Financial Services Authority's email as referred to in item 4 experiences technical disruption, the submission of the application to participate in the Sandbox is submitted to the Financial Services Authority offline by:
   a. direct handover; or b. sending via a courier service company.

6. Offline submission of applications as referred to in item 5 is addressed to:
   Head of the Department of Financial Innovation Regulation and Licensing, Digital Financial Assets, and Crypto Assets Soemitro Djojohadikusumo Building East Lapangan Banteng Street 2-4 Jakarta 10710, Indonesia.

VI. FEASIBILITY CRITERIA

The Financial Services Authority sets feasibility criteria for innovations to become Participants, including:

1. innovations that have a scope within the financial services sector to be used by Consumers, partners, and/or the public in Indonesia;

2. innovations that meet the element of novelty and/or have significant differentiating elements compared to those previously conducted in the financial sector;

3. innovations that provide benefits, improve services, and add value to Consumers, the public, and/or the financial sector ecosystem;

4. innovations that are ready for testing and development;

5. innovations that require support for testing and development, and have not been previously regulated and supervised under applicable regulations in the financial sector; and

6. other criteria established by the Financial Services Authority considering developments in financial sector technology innovation.

VII. VERIFICATION AND ANALYSIS PROCESS OF APPLICATION DOCUMENTS TO BECOME A PARTICIPANT

1. The Financial Services Authority conducts verification and analysis of the Application Form to Become a Participant and the Testing Plan submitted by prospective Participants.

2. To support the verification and analysis as referred to in item 1, the Financial Services Authority may:
   a. request the Board of Directors and/or Commissioners of the prospective Participant to present; and/or b. conduct direct interviews with the Board of Directors and/or Commissioners of the prospective Participant, to request further explanations regarding the application to become a Participant.

3. In the event that the results of the verification and analysis as referred to in item 1 still contain deficiencies, the Financial Services Authority notifies the prospective Participant to complete and submit the deficient documents online through the Financial Services Authority's electronic system.

4. In the event that the Financial Services Authority's electronic system as referred to in item 3 is unavailable and/or experiences disruption, notification to the prospective Participant is submitted via email.

5. In the event that the Financial Services Authority's email as referred to in item 4 experiences technical disruption, notification to the prospective Participant is submitted offline.

6. In the event that document deficiencies are not submitted no later than 5 (five) working days after the date of notification by the Financial Services Authority as referred to in item 3, the Financial Services Authority notifies the prospective ITSK Organizer that the application process cannot be continued.

VIII. APPROVAL OR REJECTION OF APPLICATION TO BECOME A PARTICIPANT

1. Approval or rejection of the application to become a Participant is granted by the Financial Services Authority considering the Application Form to Become a Sandbox Participant, feasibility criteria, Testing Plan, and other considerations from the Financial Services Authority.

2. The approval or rejection of the application to become a Participant is communicated to the prospective Participant via a letter issued by the work unit overseeing the Sandbox function at the Financial Services Authority.

3. The Financial Services Authority communicates the letter of approval or rejection to become a Participant no later than 20 (twenty) working days from the date the complete documents are received.

IX. TESTING AND INNOVATION DEVELOPMENT PROCESS

1. The implementation of the testing and innovation development process begins from the date the letter of approval to become a Participant is issued by the Financial Services Authority.

2. Participants actively conduct testing and innovation development in accordance with the Testing Plan submitted to the Financial Services Authority throughout the Sandbox process.

3. Participants inform the Financial Services Authority if they will make changes related to ITSK, including changes to the business model, changes to the Participant's institutional structure, and changes to the Testing Plan.

4. The Financial Services Authority may approve or reject changes made by the Participant as referred to in item 3.

5. Participants have the obligation to open every piece of information and/or documents related to the implementation of the Sandbox to the Financial Services Authority.

6. Participants have the obligation to attend every activity related to the implementation of the Sandbox.

7. In the framework of Consumer Protection, Participants undergoing the Sandbox process must inform the public that product, activity, service, and/or business model innovations are in the process of testing and development, by stating this on electronic and non-electronic media used.

X. REPORT ON THE RESULTS OF TESTING AND INNOVATION DEVELOPMENT IMPLEMENTATION

1. Participants have the obligation to submit to the Financial Services Authority the Report on the Results of Testing and Innovation Development Implementation as set forth in Annex II Part A, which is an integral part of this Circular Letter of the Financial Services Authority.

2. The Report on the Results of Testing and Innovation Development Implementation as referred to in item 1 is accompanied by a cover letter signed by members of the Participant's Board of Directors in the format as set forth in Annex II Part B, which is an integral part of this Circular Letter of the Financial Services Authority.

3. The Report on the Results of Testing and Innovation Development Implementation as referred to in item 1 is submitted periodically every quarter, for the periods of March, June, September, and December, no later than the 15th of the following month.

4. If the deadline for report submission as referred to in item 3 falls on a holiday, the deadline for report submission is on the next working day.

5. The Financial Services Authority may request Participants to adjust the report as referred to in item 1 that has been submitted.

6. The report as referred to in item 1 is submitted to the Financial Services Authority online through the Financial Services Authority's electronic system.

7. In the event that the Financial Services Authority's electronic system as referred to in item 6 is unavailable and/or experiences disruption, the submission of the report as referred to in item 1 is submitted in the form of electronic documents via email to mailingroomsumitro@ojk.go.id and OJKSandbox@ojk.go.id or other addresses designated by the Financial Services Authority.

8. In the event that the Financial Services Authority's email as referred to in item 7 experiences technical disruption, the submission of the report is submitted to the Financial Services Authority offline by:
   a. direct handover; or b. sending via a courier service company.

9. Offline submission of reports as referred to in item 8 is addressed to:
   Head of the Department of Financial Sector Technology Innovation Regulation and Licensing, Digital Financial Assets, and Crypto Assets Soemitro Djojohadikusumo Building East Lapangan Banteng Street 2-4 Jakarta 10710, Indonesia.

XI. MONITORING OF TESTING AND INNOVATION DEVELOPMENT RESULT REPORTS

1. The Financial Services Authority monitors reports as referred to in Roman numeral X item 1.

2. Monitoring as referred to in item 1 is conducted:
   a. indirectly; b. directly; and/or
   c. other monitoring methods.

3. Other monitoring methods as referred to in item 2 letter c may include interviews.

4. In the event of discrepancies between the implementation of testing and innovation development and the Testing Plan and feasibility criteria, the Financial Services Authority stops the testing and innovation development process.

5. Participants whose testing process is stopped may reapply to become Participants with the same products, activities, services, and/or business models as long as they meet the provisions in Financial Services Authority Regulations regarding the organization of ITSK.

XII. CANCELLATION OF PARTICIPANT APPROVAL

1. The Financial Services Authority may cancel Participant approval if:
   a. the Participant violates applicable legislation; b. the Participant requests cancellation of Participant approval themselves; and
   c. the Participant is issued a letter stopping the testing and innovation development process by the Financial Services Authority.

2. Participants may submit a written request for cancellation of Participant approval themselves as referred to in item 1 letter b, accompanied by:
   a. reasons for withdrawal from the testing and innovation development process; and b. a statement from the Participant that the Participant will fulfill all Participant obligations in accordance with the exit policy stated in the Testing Plan.

3. The Financial Services Authority cancels Participant approval after receiving the complete application as referred to in item 2.

4. The Financial Services Authority cancels Participant approval as referred to in item 1 letter b no later than 20 (twenty) working days after the Participant fulfills all requirements for cancellation of Participant approval and the application is received completely.

5. The Financial Services Authority issues a letter of approval for the request for cancellation of participation as referred to in item 1 letter b.

6. The Financial Services Authority issues a letter stopping the testing and innovation development process as referred to in item 1 letter c, which also contains the cancellation of Participant approval.

XIII. FINAL SANDBOX REPORT

1. Participants submit the Final Sandbox Report as set forth in Annex III Part A, which is an integral part of this Circular Letter of the Financial Services Authority.

2. Submission of the Final Sandbox Report as referred to in item 1 is accompanied by a cover letter signed by members of the Participant's Board of Directors.

3. Participants submit the Final Sandbox Report as referred to in item 1 no later than 20 (twenty) working days before the end of the testing and innovation development period.

4. The Final Sandbox Report as referred to in item 1 is submitted to the Financial Services Authority online through the Financial Services Authority's electronic system.

5. In the event that the Financial Services Authority's electronic system as referred to in item 4 is unavailable and/or experiences disruption, submission of the Final Sandbox Report is submitted in the form of electronic documents via email to mailingroomsumitro@ojk.go.id and OJKSandbox@ojk.go.id or other addresses designated by the Financial Services Authority.

6. In the event that the Financial Services Authority's email as referred to in item 5 experiences technical disruption, submission of the Final Sandbox Report is submitted to the Financial Services Authority offline by:
   a. direct handover; or b. sending via a courier service company.

7. Offline submission of the Final Sandbox Report as referred to in item 6 is addressed to:
   Head of the Department of Financial Sector Technology Innovation Regulation and Licensing, Digital Financial Assets, and Crypto Assets Soemitro Djojohadikusumo Building East Lapangan Banteng Street 2-4 Jakarta 10710, Indonesia.

XIV. SANDBOX RESULTS

1. The Financial Services Authority determines Sandbox results based on analysis results consisting of:
   a. pass; or b. fail.

2. Participants are declared to have passed as referred to in item 1 letter a if they meet at least the following criteria:
   a. have implemented the testing and innovation development scenarios for products, activities, services, and/or business models in the Testing Plan; b. test results of the testing scenarios show success reflected in the achievement of key performance indicators in the Testing Plan, such as increased business process effectiveness and/or economic benefits that can be proven with supporting documents;
   c. risk mitigation plans in the Testing Plan can be implemented during the testing and innovation development period, proven with supporting documents;
   d. the tested products, activities, services, and/or business models do not violate applicable legislation during the testing and innovation development process; and e. have adequate and sustainable business operational plans after being declared to have passed the Sandbox.

3. Determination of Sandbox results as referred to in item 1 is communicated to the Participant via letter.

4. Sandbox results as referred to in item 1 are communicated to the Participant via letter no later than 20 (twenty) working days since the Final Sandbox Report and supporting documents are submitted completely by the Participant to the Financial Services Authority.

5. Participants declared to have passed as referred to in item 1 letter a may apply for business licenses and/or registration based on considerations given by the Financial Services Authority.

6. Participants declared to have failed as referred to in item 1 letter b cannot apply for testing of the same product, activity, service, and/or business model innovations.

7. Sandbox results as referred to in item 1 letter a do not constitute a business license to conduct full business operations in the financial services sector.

XV. SANDBOX MECHANISM FLOWCHART

The flowchart of the Sandbox mechanism process, as set forth in Annex IV, which is an integral part of this Circular Letter of the Financial Services Authority.

Aat Windradi

XVI. CLOSING

This Circular Letter of the Financial Services Authority takes effect from the date of establishment.

Established in Jakarta on 3 June 2024

EXECUTIVE HEAD OF SUPERVISOR OF FINANCIAL SECTOR TECHNOLOGY INNOVATION, DIGITAL FINANCIAL ASSETS AND CRYPTO ASSETS FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, HASAN FAWZI

signed signed

ANNEX I

CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA NUMBER 5/SEOJK.07/2024

CONCERNING

MECHANISM FOR REGULATORY SANDBOX AND INNOVATION DEVELOPMENT

A. APPLICATION FORM TO BECOME A SANDBOX PARTICIPANT

I. Institutional
Company Name
Platform/Application Name and Domain Address
Company Address
Contact Person Responsible for Company (minimum 1 Director) Capital and Shareholder Names Year of Operation Number of Employees
Annex of deed of establishment of legal entity or business entity
Annex of legal entity or business entity ownership documents along with their management data
Is the company already licensed by OJK? (Yes/No) If yes, specify: … Does the company conduct business outside the financial services sector? (Yes/No) If yes, specify: … Does the company face regulatory hurdles related to the business model to be tested? (Yes/No) If yes, explain …

II. Assessment of Feasibility Criteria
Explanation that the innovation to be tested:

1. Has a scope within the financial services sector in Indonesia.
   To be filled with an explanation regarding the prospective Participant's products, activities, services, and/or business models being innovations supporting the financial services sector in Indonesia, at minimum including:
   a. whether the products, activities, services, and/or business models to be tested are intended for the market and Consumers in Indonesia? b. whether the products, activities, services, and/or business models to be tested support development in the financial services sector regulated in Indonesia?
2. Meets the element of novelty and/or has significant differentiating elements compared to those previously conducted in the financial services sector.
   To be filled with an explanation regarding the prospective Participant's products, activities, services, and/or business models being new innovations or offering solutions with significant differences, at minimum including:

a. What are the problems/issues/challenges to be addressed through the products, activities, services, and/or business models to be tested? b. Are the products, activities, services, and/or business models to be tested already regulated by the Financial Services Authority (OJK) or other Ministries/Agencies?
c. Why are the products, activities, services, and/or business models to be tested considered as new innovations or having significant differences from existing innovations in the financial services sector?
d. How do the products, activities, services, and/or business models to be tested work? e. What mitigation steps are taken by the Prospective Participant regarding risks from the products, activities, services, and business models to be tested?

3. Providing benefits, improving services, and adding value to Consumers, the public, and/or the financial services sector ecosystem.
   Filled with an explanation regarding the products, activities, services, and/or business models of the Prospective Participant being an innovation that provides benefits to Consumers, the public, and/or the financial services sector ecosystem, at minimum including:
   a. What benefits are received by Consumers, the public, and/or the financial services sector ecosystem from the products, activities, services, and business models being tested? b. Who is the target market for the products, activities, services, and/or business models being tested?

4. Ready for testing and development.
   Filled with an explanation regarding the Prospective Participant's readiness to conduct testing of products, activities, services, and/or business models, at minimum including:
   a. Are the products, activities, services, and/or business models ready for direct testing, both technically and operationally? b. Does the Prospective Participant have sufficient capital to conduct testing of products, activities, services, and/or business models?
   c. Does the Prospective Participant have sufficient human resources to conduct testing of products, activities, services, and/or business models?
   d. Does the Prospective Participant have a proposed testing scenario, key performance indicators (KPIs) to be achieved, and a risk mitigation framework to conduct testing of products, activities, services, and/or business models?

5. Requires testing and development support, and no prior regulation and supervision have been conducted under applicable regulations in the financial services sector.
   Filled with an explanation regarding the need for testing of the products, activities, services, and business models developed by the Prospective Participant, at minimum including:
   a. What are the reasons for the need for testing of the products, activities, services, and/or business models developed by the Prospective Participant? b. What support is needed by the Prospective Participant in conducting testing of the products, activities, services, and/or business models developed by the Prospective Participant?
   c. What regulations pose challenges for the Prospective Participant in developing products, activities, services, and/or business models?

Signature
Signed by members of the Board of Directors.

B. SANDBOX TESTING PLAN
No. Element of Testing Description

1. Tested innovation of products, activities, services, and business models
   Filled with:

• Description of the innovation to be tested and differences and/or added value compared to existing products, activities, services, and/or business models.
• Explanation regarding user journey.
• Explanation regarding product pricing structure, fund flow, and data flow.

2. Risk identification and mitigation
   Filled with:

• Risks from the products, activities, services, and/or business models to Consumers.
• General risks regarding the products, activities, services, and/or business models being tested (referring to the explanation of Article 9 paragraph 5 letter b of POJK Number 3 of 2024) and mitigation steps to be implemented.
• Potential losses that Consumers may experience if the testing process fails and the mitigation steps to be implemented.

3. Scope of testing
   Filled with:
   Aspects that need to be tested by the Prospective Participant within the Sandbox (e.g., IT reliability, Consumer protection, and other risk mitigations).
4. Testing data
   Filled with:
   Data used by the Prospective Participant in conducting testing.
5. Limit on number of Consumers, partners, and transactions
   Filled with:

• Number of Consumers required for testing and reasons for setting that number.
• Consumer segments (provide detailed explanation regarding the selection of consumer segments, both retail and non-retail, and reasons for selection).
• Explanation of strategies conducted to meet the number and segments of Consumers (e.g., advertising or Consumers owned by partners).
• Number of partners/testing partners (Financial Service Providers (LJK) and non-LJK) needed in testing and reasons for setting that number.
• Types of partners (provide detailed explanation regarding partner types and reasons for selection).
• Maximum limits on frequency, value, and/or volume of transactions.

6. Timeframe and implementation stage plan
   Filled with:

• Timeframe required by the Prospective Participant to conduct testing.
• Important achievement milestones (milestone) and timeline that need to be prepared to ensure the success of KPIs.

7. Disclosure to Consumers
   Filled with:

• Explanation to Consumers that the Prospective Participant participates in the Sandbox process at the Financial Services Authority (OJK).
• Explanation to Consumers regarding potential risks related to the products or services.

8. Consumer complaint services
   Filled with:
   Prospective Participant's strategy in handling, managing, and resolving complaints.
9. Compensation mechanism
   Filled with:

• Explanation to Consumers regarding compensation if the testing and development process causes Consumer losses (e.g., loss of funds).
• Explanation regarding the compensation mechanism.

10. Testing resources and infrastructure
    Filled with:

• Description of tasks and division of responsibilities in Sandbox implementation.
• Capital readiness.
• Human resource readiness (including experts/expertise) owned.
• Human resource needs (including experts/expertise) required.
• Supporting infrastructure owned (e.g., software, hardware, algorithms).
• Supporting infrastructure required in testing (e.g., software, hardware, algorithms).

11. Exit policy
    Filled with:

• Explanation regarding the business continuity plan owned by the Prospective Participant.
• Plan to settle rights and obligations if the Prospective Participant decides to terminate testing and development earlier, or if OJK requires the company to stop testing earlier.
• Explanation regarding Consumer handling mechanisms if the testing process fails (e.g., Consumer fund return mechanisms, Consumer claim handling, and communication to Consumers).

12. Testing and innovation development scenarios
    Filled with:

• Proposed scenarios to test the reliability of products, activities, services, and/or business models.
• Quantitative and qualitative parameters in assessing the reliability of products, activities, services, and/or business models (e.g., costs, time, behavioral analysis, survey results, interview results).

13. Key Performance Indicators (KPIs)
    Filled with:

• Achievement indicators from the scenarios conducted in testing.
• Parameters indicating that testing has been successful based on the established indicators.
• Expected results by the Prospective Participant from the testing conducted.
  Examples:
  Business Operational KPIs
  Net Promoter Score (NPS)
  Customer Satisfaction Score (CSAT)
  Consumer complaint resolution ratio
  Average revenue per user (ARPU)
  Customer Retention Rate (CRR)
  Sales/Revenue
  Testing KPIs
  Number of testing scenarios conducted
  Testing success ratio
  Average service time
  Number of risk mitigations applied

14. AML/CFT and anti-fraud strategies
    Filled with:
    Plans and implementation of anti-money laundering and counter-terrorist financing (AML/CFT) programs (e.g., conducting customer due diligence or enhanced due diligence), and fraud prevention in the financial services sector.
15. Other additional information
    For example, filled with:

• Prospective Participant's additional capital plans and limits on partners holding or controlling Consumer funds.
• Cyber resilience and readiness plans.

C. COVER LETTER FOR SANDBOX PARTICIPANT APPLICATION
Cover Letter for Sandbox Participant Application Number : …………………………… dd mm yyyy Attachments : ..………………………….
Subject : Application to become
Sandbox Participant
To
Head of the Technology Innovation Regulation and Licensing Department Financial Services Sector, Digital Financial Assets and Crypto Assets

Referring to the Financial Services Authority (OJK) Circular Letter Number … Year 2024 regarding the Mechanism for Testing Room and Development (Sandbox), we hereby submit an application to become a Sandbox Participant:
Applicant Name : ....................................................
Nationality : ....................................................
Applicant Position : ....................................................
Applicant Address : ....................................................
City ...
Province ...
Postal Code ...
Applicant Phone Number : ....................................................
Applicant Email : ....................................................
Company Name : …………………………………………..
Application Name : …………………………………………..
Company Address : ....................................................
City ...
Province ...
Postal Code ...
Company Phone/Fax Number : ....................................................
Company Website Address (if any)
: ....................................................
Company Email : ....................................................
To complete the aforementioned application, we hereby submit the following documents:

1. Sandbox Participant Application Form completed with documents:
   a. Deed of establishment of legal entity or business entity; and

Aat Windradi
Established in Jakarta on 3 June 2024
EXECUTIVE HEAD OF FINANCIAL SECTOR TECHNOLOGY INNOVATION SUPERVISOR, DIGITAL FINANCIAL ASSETS AND CRYPTO ASSETS FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, HASAN FAWZI b. Legal entity or business entity ownership documents along with management data
2. Sandbox Testing Plan.
Hereby stating that documents submitted via electronic system or electronic mail are true and identical to the original documents. If it is later found that the data/information/documents submitted are incorrect and/or there is forgery, we are willing to be subject to sanctions in accordance with applicable regulations. This is our application, and for your attention, Sir/Madam, we express our gratitude.
Board of Directors ……………...............
Stamp Duty
Rp.10,000,-
..................................
(Clear Name and Signature) sign sign

APPENDIX II
FINANCIAL SERVICES AUTHORITY (OJK)
REPUBLIC OF INDONESIA
CIRCULAR LETTER NUMBER 5/SEOJK.07/2024
REGARDING
MECHANISM FOR TESTING ROOM AND INNOVATION DEVELOPMENT

A. REPORT ON THE IMPLEMENTATION OF TESTING AND INNOVATION DEVELOPMENT Testing and Innovation Development Implementation Report Quarter … Year 20…

1. Executive Summary
   a. Summary of testing implementation. b. Types of scenarios conducted in testing.
   Filled with testing scenarios that have been conducted up to the reporting period in accordance with the scenarios stated in the Testing Plan.
   c. Summary of testing results for the testing scenarios conducted.
   Filled with the results of the testing scenarios that have been conducted up to the reporting period. d. Identification of failures that occurred in testing (if any). e. Progress of key performance indicators (KPIs).
2. Summary of testing and development
   a. Number of Consumers and Consumer segments.
   Filled with a comparison during the reporting period with the Testing Plan. b. Number of partners and types of partners.
   Filled with a comparison during the reporting period with the Testing Plan.
   c. Frequency, value, and volume of transactions.
   Filled with a comparison during the reporting period with the Testing Plan. d. Operational incidents and steps taken to address them (if any). For example

• Number and nature of technology failures.
• Number and nature of data security incidents.
• Number and nature of cybersecurity incidents.
  e. Identification of risks obtained after conducting testing and potentially harming Consumers (if any).

2. Challenges in the testing process
   a. Challenges found during testing (e.g., regulatory, operational, or market condition challenges). b. Strategies conducted to mitigate challenges found during testing.
3. Impact and benefits of products, activities, services, and/or business models
   a. Explain the acceptance rate of the products, activities, services, and/or business models being tested. b. Consumer and/or partner feedback.
   c. Number and types of Consumer and/or partner complaints handled (if any).
   d. Compensation for Consumer and/or partner losses (if any). e. Number of Consumer funds/assets stored at the end of the testing period (if any).
4. Next steps
   Company plans for the next quarter.

B. COVER LETTER FOR TESTING AND INNOVATION DEVELOPMENT IMPLEMENTATION REPORT Cover Letter for Testing and Innovation Development Implementation Report Number : …………………………… dd mm yyyy Attachments : ..…………………………. Subject : Testing and Innovation Development Implementation Report To Head of the Technology Innovation Regulation and Licensing Department Financial Services Sector, Digital Financial Assets and Crypto Assets

I, the undersigned below:
Name : ....................................................
Position : ....................................................
Company Name : …………………………………………..
Application Name : …………………………………………..
Company Address : ....................................................
City ...
Province ...
Postal Code ...
Company Phone/Fax Number : ....................................................
Hereby stating that:

1. The Sandbox Implementation Report has been in accordance with the documents and information submitted during the Sandbox process and I take full responsibility for the report.
2. Documents submitted via electronic system or electronic mail are true and identical to the original documents.
   If it is later found that the data/information/documents submitted are incorrect and/or there is forgery, we are willing to be subject to sanctions in accordance with applicable regulations. This statement is made truthfully so that it can be used as appropriate.
   President Director of PT……………...............
   Stamp Duty
   Rp.10,000,-
   ..................................
   (Clear Name and Signature)

Aat Windradi
Established in Jakarta on 3 June 2024
EXECUTIVE HEAD OF FINANCIAL SECTOR TECHNOLOGY INNOVATION SUPERVISOR, DIGITAL FINANCIAL ASSETS AND CRYPTO ASSETS FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, HASAN FAWZI sign sign

APPENDIX III
FINANCIAL SERVICES AUTHORITY (OJK)
REPUBLIC OF INDONESIA
CIRCULAR LETTER NUMBER 5/SEOJK.07/2024
REGARDING
MECHANISM FOR TESTING ROOM AND INNOVATION DEVELOPMENT

A. FINAL SANDBOX REPORT
Final Sandbox Report
I. Executive Summary

1. Summary of company participation in Sandbox
2. Objectives of testing implementation
3. Testing and development results for testing scenarios and innovation development
4. Identification of failed testing and innovation development and incidents that occurred
5. Fulfillment of key performance indicators (KPIs)
   II. Summary of testing and innovation development
6. Number of Consumers and Consumer segments.
   Filled with a comparison during the reporting period with the Testing Plan.
7. Number of partners and types of partners.
   Filled with a comparison during the reporting period with the Testing Plan.
8. Frequency, value, and volume of transactions.
   Filled with a comparison during the reporting period with the Testing Plan.
9. Risks identified in the Testing Plan and their handling.
10. Identification of testing results that have the potential to harm Consumers.
    III. Compliance with regulations
11. Actions taken to ensure compliance with applicable regulations.
12. Explanation regarding each challenge faced in relation to regulations and their handling.

IV. Consumer Impact and Benefits

1. Consumer and/or partner satisfaction levels.

2. Consumer and/or partner feedback.

3. Number, and types of Consumer and/or partner complaints handled (if any).

4. Compensation for Consumer and/or partner losses (if any).

5. Details of each Consumer fund/asset stored at the end of the testing period and Consumer fund/asset issues during the Sandbox period (if any).
   V. Operational Aspects

6. Operational incidents and steps taken to address them (if any).
   For example

• Number and nature of technology failures.
• Number and nature of data security incidents.
• Number and nature of cybersecurity incidents.
  VI. Lessons Learned

1. Things learned from testing conducted by Participants in Sandbox.
   VII. Next Steps
2. Company plans after Sandbox.
3. Proposals for additional regulations needed to enable the company to transition out of Sandbox (if any).
   For example, removal of restrictions or new regulatory frameworks that need to be created.

Aat Windradi
B. COVER LETTER FOR FINAL SANDBOX REPORT
Established in Jakarta on 3 June 2024
EXECUTIVE HEAD OF FINANCIAL SECTOR TECHNOLOGY INNOVATION SUPERVISOR, DIGITAL FINANCIAL ASSETS AND CRYPTO ASSETS FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, HASAN FAWZI Cover Letter for Final Sandbox Report Number : …………………………… dd mm yyyy Attachments : ..…………………………. Subject : Final Sandbox Report To Head of the Technology Innovation Regulation and Licensing Department Financial Services Sector, Digital Financial Assets and Crypto Assets

I, the undersigned below:
Name : ....................................................
Position : ....................................................
Company Name : …………………………………………..
Application Name : …………………………………………..
Company Address : ....................................................
City ...
Province ...
Postal Code ...
Company Phone/Fax Number : ....................................................
Hereby stating that the Final Sandbox Report has been in accordance with the documents and information submitted during the Sandbox process and I take full responsibility for the report. This statement is made truthfully so that it can be used as appropriate.
President Director of PT……………...............
Stamp Duty
Rp.10,000,-
..................................
(Clear Name and Signature) sign sign

APPENDIX IV
FINANCIAL SERVICES AUTHORITY (OJK)
REPUBLIC OF INDONESIA
CIRCULAR LETTER NUMBER 5/SEOJK.07/2024
REGARDING
MECHANISM FOR TESTING ROOM AND INNOVATION DEVELOPMENT

SANDBOX MECHANISM FLOWCHART
Testing and Development Period (Sandbox)
Stage 1
Application to Become Participant
Stage 2
Document Verification and Analysis Process
Application
Testing and Development Process
Innovation
Stage 4
Prospective Participant submits application to become Sandbox Participant, completed with:
a. Application Form b. Testing Plan
c. Cover Letter
d. Supporting Documents (if required).

• OJK conducts
  verification and analysis of the application form and Prospective Participant's testing plan
• If the results of
  verification and analysis still have shortcomings, the Prospective Participant submits document corrections.
  Sandbox Participant Registration Period
• Participant actively:
  ✓ conducts testing and development of innovation in accordance with the Testing Plan ✓ submits testing results reports and development, as well as every change periodically and incidentally ✓ conducts activities, cooperation, and coordination of Participant ✓ submits final Sandbox report (20 working days before Sandbox timeframe expires)
• OJK has the authority
  to conduct direct or indirect monitoring or through other monitoring methods.
• Prospective Participant:
  LJK and/or other parties (Non-LJK) who intend to conduct ITSK Provision
• Prospective Participants
  who are LJK must obtain recommendations from the relevant supervisor at OJK.
  OJK provides approval or rejection to become
  Participant.
  Approval or
  Rejection to Become Participant
  Stage 3
  (Maximum 1 Year)*
  Sandbox Results
  Stage 5
  Revocation of Approval as Participant
• OJK may
  conduct revocation of approval as
  Participant if:
  a. Participant commits violations of regulations; b. Participant submits request for revocation of approval as Participant;
  c. Participant
  is issued a
  Sandbox suspension letter by OJK.
  Pass Fail
  Participant may apply for business license and/or registration based on considerations provided by OJK.
• stop business
  operational activities, product innovation, and services using business models being tested and developed in Sandbox;
• settle all
  obligations to
  Consumers and other parties; and
• implement exit
  policy stated in the Testing Plan
  (20 Working Days)
  LJK
  NON-LJK
  OJK SUPERVISOR
  RECOMMENDATION
  *) OJK has the authority to set a testing and development timeframe different from the 1-year timeframe

Aat Windradi
Established in Jakarta on 3 June 2024
EXECUTIVE HEAD OF FINANCIAL SECTOR TECHNOLOGY INNOVATION SUPERVISOR, DIGITAL FINANCIAL ASSETS AND CRYPTO ASSETS FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, HASAN FAWZI sign sign