Abstract
Indonesia presents one of Southeast Asia’s most complex yet promising landscapes for real estate tokenisation. With over 20 million cryptocurrency holders, a rapidly growing digital economy, and an estimated $88 billion tokenized asset market by 2030, investor curiosity is substantial . However, this enthusiasm encounters a foundational legal constraint: under Indonesian law, blockchain tokens cannot represent direct title to land or buildings. As the Otoritas Jasa Keuangan (OJK) has explicitly stated, “Token hanya merepresentasikan manfaat ekonomi, sementara hukum pertanahan belum mengakui token sebagai bukti hak atas tanah atau bangunan” (Tokens only represent economic benefits; land law does not recognize tokens as proof of rights to land or buildings) . This paper analyses Indonesia’s evolving regulatory framework for real estate tokenisation, examining the critical transition of crypto asset supervision from Bappebti to OJK effective January 2026, the landmark sandbox approvals for property tokenisation pilots, and the fundamental legal synchronization challenge between digital finance regulation and land law. It evaluates the prohibition on direct cryptocurrency payment for property under Law No. 7 of 2011, which can render notarial deeds void if violated . The paper concludes by assessing the open-source SQMU standard against Indonesia’s regulatory requirements, proposing a structured implementation strategy that utilizes PT PMA foreign-owned companies as the legal vehicle, enforces OJK whitelist compliance, and ensures settlement exclusively in Indonesian Rupiah (IDR) through licensed exchanges .
I. Introduction
The global real estate tokenisation movement has reached Indonesia at a moment of profound regulatory transition. As of January 2026, the Otoritas Jasa Keuangan (OJK) has assumed full supervisory authority over digital financial assets, including cryptocurrencies, marking a fundamental shift from the previous commodity-based framework administered by Bappebti . This transition reflects Indonesia’s ambition to position itself as a sophisticated digital economy while maintaining rigorous investor protection and legal certainty.
The potential scale is undeniable. Industry projections estimate Indonesia’s tokenized asset market could reach $88 billion by 2030 . The country boasts over 20 million cryptocurrency holders, one of the largest retail crypto populations in Southeast Asia . Bali, in particular, has emerged as a hub for digital nomads and entrepreneurs seeking to convert digital assets into tangible real estate, generating sustained investor curiosity about crypto-funded property transactions .
Yet this enthusiasm confronts a fundamental legal reality. Indonesian law draws a clear boundary: blockchain tokens represent economic benefits, not legal ownership of land or buildings . The OJK’s Head of Digital Financial Innovation Group, Ludy Arlianto, has explicitly stated that property tokenisation faces a synchronization challenge between land law and digital financial regulation . This means that while tokens can represent economic rights to property (rental income, appreciation value), they cannot by themselves transfer legal title.
This paper analyses the Indonesian regulatory framework for real estate tokenisation, examining the authorities, laws, and compliance requirements that govern this emerging sector. It then evaluates how the open-source SQMU standard can be implemented compliantly within Indonesia’s legal constraints, utilizing PT PMA companies as the legal vehicle, enforcing OJK compliance through whitelist contracts, and ensuring settlement exclusively in Indonesian Rupiah through licensed channels .
II. The Indonesian Regulatory Framework for Tokenised Real Estate
2.1 Regulatory Authorities
Otoritas Jasa Keuangan (OJK)
The OJK is now the primary regulator for digital financial assets in Indonesia. Effective January 2026, supervision of crypto assets fully transitioned from Bappebti (the Commodity Futures Trading Regulatory Agency) to the OJK . This transfer fundamentally reclassifies crypto assets from “commodities” to “Digital Financial Assets” (DFA), subjecting them to institutional-level supervision under OJK Regulation No. 23 of 2025 concerning Digital Financial Asset Trading .
The OJK’s mandate includes:
- Licensing and oversight of Digital Financial Asset trading platforms
- Regulation of tokenized asset offerings
- Consumer protection and market conduct rules
- Coordination with Bank Indonesia and other authorities on payment system implications
For real estate tokenisation, the OJK’s Technology Innovation in the Financial Sector (ITSK) framework provides the regulatory pathway for pilots and approvals . Several property tokenisation projects have successfully passed through the OJK regulatory sandbox, demonstrating that the authority is open to innovation while maintaining rigorous oversight .
Bank Indonesia (BI)
Bank Indonesia is the central bank and regulates payment systems, monetary policy, and currency matters. Under Law No. 7 of 2011 concerning Currency, the Indonesian Rupiah is the sole legal tender for financial transactions within the Republic . This has profound implications for real estate tokenisation: direct cryptocurrency payment for property can render notarial deeds void and expose parties to criminal penalties .
Bank Indonesia also oversees electronic payment systems and requires that any platform facilitating property transactions utilize licensed payment channels operating in Rupiah.
Ministry of Agrarian Affairs and Spatial Planning / National Land Agency (ATR/BPN)
The Ministry of Agrarian Affairs and Spatial Planning (ATR/BPN) administers Indonesia’s land registration system. Under the Basic Agrarian Law (Law No. 5 of 1960), land rights are evidenced by certificates of title issued by the National Land Agency . Crucially, there is currently no legal recognition of blockchain tokens as evidence of land rights. The synchronization challenge identified by the OJK refers specifically to the gap between digital financial regulation (which permits tokenization) and land law (which does not recognize tokens as proof of title) .
For tokenised real estate projects, this means that the underlying property must be held by a legal entity recognized under Indonesian law, with tokens representing economic rights to that entity, not direct title to the land.
Ministry of Trade (Bappebti – Transitioning)
Historically, Bappebti regulated crypto assets as commodities under the Commodity Futures Trading Law. With the transition to OJK effective January 2026, Bappebti’s role in digital asset oversight is substantially reduced . However, Bappebti’s sandbox experience and approval of early tokenisation pilots provide precedent and regulatory history that inform current OJK approaches .
2.2 Primary Legislation and Rules
OJK Regulation No. 23 of 2025 concerning Digital Financial Asset Trading
This regulation establishes the comprehensive framework for digital financial assets, including tokenized real estate. Key provisions include:
- Definition of Digital Financial Assets: Any digital representation of value or rights that can be traded electronically, including tokenized assets backed by underlying assets such as real estate .
- Licensing Requirements: Platforms trading digital financial assets must obtain OJK licenses, meeting capital, governance, and technology security requirements .
- Asset Backing and Custody: Issuers must demonstrate clear legal ownership of underlying assets and maintain proper custody arrangements .
- Disclosure Obligations: Comprehensive whitepapers and offering documents must be approved by OJK before public offerings .
- Investor Protection: Platforms must implement KYC/AML procedures, transaction monitoring, and risk disclosures .
- Sandbox Pathway: New models, including property tokenisation, can be tested under OJK supervision before full licensing .
Law No. 7 of 2011 concerning Currency
This law establishes the Indonesian Rupiah as the sole legal tender and has critical implications for real estate tokenisation:
- All financial transactions, including property purchases, must be settled in Rupiah
- Using cryptocurrency directly as payment for property can result in:
- The notarial deed being declared void
- Criminal penalties for parties involved
- Invalidation of the property transfer
For tokenised real estate, this means that while tokens may represent economic rights, the underlying purchase of property must be settled in Rupiah through licensed banking channels. Any platform that accepts cryptocurrency must immediately convert to Rupiah through licensed exchanges and settle in fiat currency .
Basic Agrarian Law (Law No. 5 of 1960) and Land Registration
The Basic Agrarian Law establishes the framework for land rights in Indonesia:
- Land rights are evidenced by certificates issued by the National Land Agency (ATR/BPN)
- Rights include Hak Milik (freehold, limited to Indonesian citizens), Hak Guna Bangunan (right to build, available to foreign-owned companies), and Hak Pakai (right to use)
- Transfers of land rights require notarial deeds and registration with the Land Agency
Critically, there is no provision for blockchain tokens to serve as evidence of land rights. Tokens cannot be registered with ATR/BPN, and token transfers do not effect legal changes in land ownership .
Investment Law and PT PMA Structures
Foreign investment in Indonesia is governed by Law No. 25 of 2007 concerning Capital Investment. For foreign-owned entities wishing to invest in Indonesian real estate, the PT PMA (Penanaman Modal Asing) structure is the appropriate vehicle:
- PT PMA is a limited liability company established under Indonesian law with foreign shareholding
- PT PMA can hold certain land rights, including Hak Guna Bangunan (right to build) for up to 30 years, extendable
- PT PMA can issue shares representing economic interests in the company
For real estate tokenisation, the PT PMA structure is essential. The PT PMA holds legal title to the property, and tokens represent economic rights (shares, profit participation, or debt instruments) in the PT PMA. This creates a legally recognized structure where:
- Property title is registered with ATR/BPN in the PT PMA’s name
- Tokens represent interests in the PT PMA, not direct land rights
- Indonesian land law is satisfied (the PT PMA is the legal owner)
- Investors receive enforceable economic rights through their token holdings
2.3 Recent Regulatory Developments
January 2026: OJK Assumes Full Crypto Supervision
The transition of crypto asset supervision from Bappebti to OJK effective January 2026 represents a fundamental shift in regulatory philosophy . Crypto assets are now classified as “Digital Financial Assets” rather than commodities, subjecting them to the full scope of OJK’s institutional supervision framework . This transition includes:
- Re-registration of all crypto platforms with OJK
- Enhanced capital and governance requirements
- Stricter consumer protection rules
- Integration with broader financial stability oversight
OJK Sandbox Approvals for Property Tokenisation
Several property tokenisation pilots have successfully passed through the OJK regulatory sandbox . These pilots demonstrated:
- Technical feasibility of tokenising real estate assets
- Investor demand for fractional property ownership
- Compliance with KYC/AML requirements
- Integration with licensed payment channels
The sandbox approvals establish regulatory precedent and demonstrate OJK’s openness to property tokenisation within the existing legal framework. However, all sandbox projects operated within the constraint that tokens represent economic benefits, not legal title .
Development Rights Tokenisation (Maluku Islands)
A landmark transaction involving the tokenisation of development rights for the Maluku Islands was reported in late 2025 . While details remain limited, this transaction reportedly represents the world’s largest real-world asset (RWA) tokenisation deal to date . The structure is understood to involve:
- A PT PMA holding development rights
- Tokens representing participation in the development project
- Settlement in Rupiah through licensed channels
- OJK oversight of the offering
This transaction demonstrates that large-scale, legally compliant real estate tokenisation is possible in Indonesia when structured correctly.
OJK Regulation No. 23 of 2025
The issuance of OJK Regulation No. 23 of 2025 concerning Digital Financial Asset Trading provides the comprehensive legal framework for tokenized assets . Key provisions relevant to real estate include:
- Clear definition of digital financial assets and permissible structures
- Licensing requirements for platforms and issuers
- Asset backing and custody rules
- Disclosure and investor protection standards
- Enforcement powers and penalties
III. Legal Interpretation and Compliance Requirements
3.1 Token Classification
Under OJK Regulation No. 23 of 2025, real estate tokens are classified as Digital Financial Assets backed by underlying assets . The specific classification depends on the rights attached to the token:
- Equity Tokens: Representing shares in a PT PMA that holds property
- Debt Tokens: Representing financing arrangements secured by property
- Revenue-Sharing Tokens: Representing rights to rental income or development proceeds
- Fund Units: Representing participation in a collective investment scheme holding real estate
The OJK requires issuers to clearly define the legal nature of the token in their whitepaper and offering documents . This classification determines applicable requirements for disclosure, investor eligibility, and ongoing reporting.
3.2 Real Estate Law and Title Transfer
The fundamental constraint in Indonesian law is that blockchain tokens cannot represent direct title to land or buildings. As the OJK has stated, there is a synchronization challenge between land law and digital financial regulation .
For compliant real estate tokenisation, the following structure is required:
- PT PMA Formation: A foreign-owned limited liability company (PT PMA) is established under Indonesian law to hold the property
- Property Acquisition: The PT PMA acquires legal title to the property, registered with ATR/BPN in the PT PMA’s name
- Rights Definition: The PT PMA’s constitutional documents define the rights of shareholders or participants
- Token Issuance: Tokens are issued representing economic rights (shares, profit participation, or debt) in the PT PMA
- Investor Rights: Token holders’ rights are enforceable against the PT PMA under Indonesian company law
This structure ensures:
- Legal title is properly registered with ATR/BPN (satisfying land law)
- Tokens represent legally recognized interests (satisfying financial regulation)
- Investors have enforceable rights (satisfying investor protection)
The PT PMA structure is essential for foreign investment. Hak Guna Bangunan (right to build) can be held by PT PMA for up to 30 years, renewable, providing a long-term legal basis for property ownership .
3.3 Payment and Currency Regulations
Law No. 7 of 2011 concerning Currency imposes strict requirements that directly impact real estate tokenisation:
- Mandatory Rupiah Use: All financial transactions within Indonesia must be settled in Indonesian Rupiah
- Cryptocurrency Payment Prohibition: Using cryptocurrency directly as payment for property can:
- Render the notarial deed void
- Subject parties to criminal penalties
- Invalidate the property transfer
For tokenised real estate projects, this means:
- Primary Issuance: When investors purchase tokens, payment must be in Rupiah through licensed channels. If investors pay in cryptocurrency, the platform must immediately convert to Rupiah through a licensed crypto exchange before settling the transaction .
- Property Acquisition: When the PT PMA acquires property, payment to the seller must be in Rupiah through licensed banking channels.
- Rental Distributions: Any rental income distributed to token holders must be paid in Rupiah through licensed payment systems.
Bank Indonesia supervises payment systems and requires that all payment service providers be licensed. Projects must integrate with BI-licensed payment gateways or banks .
3.4 AML/KYC and Investor Protection
OJK Regulation No. 23 of 2025 imposes comprehensive AML/KYC requirements:
- Customer Due Diligence: Platforms must verify investor identity, source of funds, and beneficial ownership
- Transaction Monitoring: Ongoing surveillance of token transfers for suspicious activity
- Suspicious Transaction Reporting: Reports must be filed with the Indonesian Financial Transaction Reports and Analysis Centre (PPATK)
- Record Keeping: Comprehensive audit trails must be maintained for regulator inspection
Investor protection requirements include:
- Whitelisted Participants: Only verified investors may hold tokens. Smart contracts must enforce transfer restrictions .
- Risk Disclosures: Offering documents must clearly explain the legal nature of tokens (economic rights, not direct title) and associated risks .
- Suitability Assessments: Platforms must ensure investments are appropriate for each investor’s risk profile .
- Custody Rules: If platforms custody investor funds or tokens, they must meet OJK custody requirements .
3.5 Licensing and Intermediary Obligations
Entities involved in real estate tokenisation must hold appropriate OJK licenses:
- Platform License: Platforms facilitating token issuance or trading must be licensed as Digital Financial Asset trading platforms under OJK Regulation No. 23/2025 .
- Issuer Obligations: PT PMA issuing tokens must comply with ongoing disclosure and reporting requirements .
- Custodian Licenses: Entities holding investor funds or tokens on behalf of others may require custody licenses .
- Payment Service Provider Licenses: Platforms handling fiat currency must integrate with BI-licensed payment channels .
The sandbox pathway remains available for innovative models. New real estate tokenisation structures can be tested under OJK supervision before full licensing .
IV. The SQMU Standard: Architecture and Regulatory Fit
4.1 Overview of SQMU
The SQMU (Square Metre Unit) standard is an open-source protocol for real estate tokenisation built on four core design principles:
- Measurement-Based Supply: 1 SQMU token = 1 verified square metre of a specific property. Total supply is fixed at deployment based on certified area and cannot be inflated without corresponding legal modifications to the underlying property.
- ERC-1155 Dual Representation: Each property receives a unique non-fungible token ID, while ownership units are represented as fungible tokens under that ID. This captures both the unique identity of each property and the divisibility of ownership.
- Lifecycle Alignment: The standard encodes the property lifecycle (Acquire → Hold → Rent → Finance → Transfer → Retire) into smart contract logic, enabling automated compliance at each stage.
- Built-in Compliance Tools: Whitelist contracts, transfer restrictions, and audit trails enable regulatory enforcement at the protocol level.
4.2 Alignment with Indonesian Regulatory Requirements
| Regulatory Requirement | SQMU Feature | How It Aligns |
|---|---|---|
| Fixed Supply / No Dilution | Measurement-based minting (1 SQMU = 1 m²) | Total supply equals certified area – prevents token inflation beyond property size; satisfies OJK transparency expectations |
| Transfer Restrictions / Whitelisting | Whitelist contracts | Only OJK-verified wallets can hold/transfer tokens; essential for enforcing investor eligibility |
| AML/KYC Compliance | On-chain compliance registry | Verifiable proofs of identity without exposing private data; supports OJK and PPATK requirements |
| Economic Rights Only (Not Title) | SQMU tokens represent interests in PT PMA | Tokens structured as shares or participation rights in the PT PMA, not direct land rights – aligns with Indonesian land law |
| PT PMA Integration | Token ID maps to PT PMA share class | Each property’s token ID corresponds to a specific class of shares in the PT PMA holding legal title |
| Transparency / Audit | Open-source code + NatSpec | Full visibility for OJK auditors and regulators |
| Rupiah Settlement | Atomic swap functionality with fiat on-ramp | Platform can integrate with licensed crypto exchanges for instant IDR conversion, ensuring compliance with Law No. 7/2011 |
| Rental Distribution | Automated payout logic | SQMU-Rent contracts can distribute IDR rental proceeds proportionally to token holders through licensed payment channels |
4.3 Implementation Strategies for Compliance
To implement SQMU compliantly in Indonesia, developers must follow a structured approach that respects the fundamental constraint that tokens represent economic rights, not legal title .
Step 1: Establish the Legal Vehicle (PT PMA)
- Form a PT PMA (foreign-owned limited liability company) under Indonesian law
- Ensure the PT PMA has appropriate land rights (Hak Guna Bangunan for long-term ownership)
- Register the PT PMA’s constitutional documents defining shareholder rights
- Obtain necessary investment approvals from the Ministry of Investment
Step 2: Property Acquisition and Verification
- PT PMA acquires legal title to the property, registered with ATR/BPN
- Engage licensed surveyors to verify property area (for SQMU measurement basis)
- Document all legal and technical details for OJK disclosure
Step 3: Token Design and Whitelist Configuration
- Deploy SQMU contracts with total supply equal to verified area
- Configure token ID to map to specific PT PMA share class
- Implement whitelist contract requiring OJK-approved KYC for wallet addresses
- Program transfer restrictions to prevent trading with unverified wallets
Step 4: OJK Engagement and Licensing
- Prepare comprehensive whitepaper and offering documents as required by OJK Regulation No. 23/2025
- Submit for OJK review (sandbox pathway available for new models)
- Obtain platform license if operating a trading facility
- Ensure all disclosures explain that tokens represent economic rights in PT PMA, not direct land title
Step 5: Payment Integration
- Partner with licensed crypto exchanges for IDR conversion
- Ensure all investor payments are ultimately settled in Rupiah through licensed banking channels
- Integrate with BI-licensed payment gateways for rental distributions
Step 6: Ongoing Compliance
- Maintain whitelist with current KYC status of all token holders
- File required reports with OJK and PPATK
- Conduct regular audits of token supply against certified property area
- Distribute rental income through licensed payment channels
4.4 Limitations and Considerations
SQMU Does Not Replace Legal Title: Even with perfect technical implementation, SQMU tokens alone cannot constitute legal title to land in Indonesia. The PT PMA must hold legal title, with tokens representing economic rights in that entity . This is not a limitation of SQMU but a requirement of Indonesian law that any compliant project must respect.
Regulatory Approval Required: SQMU’s open-source code does not confer any regulatory exemptions. All tokenised offerings must follow OJK-approved pathways before marketing or onboarding investors . The sandbox provides a testing environment, but full licensing is required for commercial operations.
Smart Contract Audits Essential: Given the value at stake, SQMU contracts must undergo rigorous security audits by recognised firms. OJK expects issuers to address smart contract risks in their disclosures .
Currency Compliance Critical: Law No. 7/2011 imposes strict requirements. Any platform that accepts cryptocurrency directly without immediate IDR conversion risks voiding property transactions and exposing parties to criminal penalties . Integration with licensed exchanges is non-negotiable.
Land Law Synchronization: The OJK has explicitly acknowledged the synchronization challenge between digital finance regulation and land law . Until Indonesian land law is amended to recognize blockchain tokens as evidence of title (which is not currently planned), the PT PMA structure remains the only compliant pathway.
Foreign Ownership Restrictions: While PT PMA can hold Hak Guna Bangunan, certain land types and locations may have additional restrictions. Legal due diligence is essential before property acquisition .
V. Conclusion
Indonesia presents a distinctive profile in the global real estate tokenisation landscape: massive investor demand and regulatory openness to digital financial assets, combined with fundamental legal constraints that require careful structuring . The transition of crypto supervision from Bappebti to OJK effective January 2026 marks a new era of institutional oversight, with OJK Regulation No. 23 of 2025 providing a comprehensive framework for digital financial assets .
The foundational legal reality is that blockchain tokens cannot represent direct title to land under Indonesian law . As the OJK has explicitly stated, tokens represent economic benefits, while land law does not recognize tokens as proof of rights . This synchronization challenge requires tokenisation projects to utilize the PT PMA structure: a foreign-owned limited liability company holds legal title, and tokens represent economic rights (shares, profit participation, or debt) in that entity .
Currency regulation under Law No. 7 of 2011 imposes additional requirements: all transactions must ultimately settle in Indonesian Rupiah through licensed channels . Direct cryptocurrency payment for property can render notarial deeds void and expose parties to criminal penalties . Platforms must therefore integrate with licensed crypto exchanges for immediate IDR conversion .
The SQMU standard aligns closely with these regulatory requirements when properly implemented. Its measurement-based supply (1 SQMU = 1 verified m²) provides the transparency and auditability that OJK expects . Its whitelist contracts enable enforcement of investor eligibility and transfer restrictions . Its ERC-1155 dual-layer architecture allows mapping between token IDs and PT PMA share classes . And its open-source, auditable code supports regulator inspection .
Crucially, SQMU is positioned as a technology layer, not a regulatory competitor. It integrates with Indonesia’s required legal structures (PT PMA companies), enforces OJK compliance through whitelist contracts, and ensures settlement in Rupiah through licensed channels . The standard does not attempt to circumvent Indonesian law but provides the technical tools to comply with it efficiently and transparently .
The outlook for real estate tokenisation in Indonesia is promising but demands respect for legal fundamentals. Several property tokenisation pilots have successfully passed through the OJK sandbox, demonstrating regulatory openness . Landmark transactions, including the reported $28 billion development rights tokenisation in the Maluku Islands, show the scale achievable with compliant structures . The projected $88 billion tokenized asset market by 2030 reflects genuine investor demand .
For developers, issuers, and investors, the message is clear: Indonesia offers substantial opportunity, but only for those who respect its legal framework. The PT PMA structure is essential. Currency compliance is mandatory. OJK licensing is required. And tokens must be clearly positioned as representing economic rights, not direct title. The SQMU standard provides the open-source technology layer to build compliantly within these parameters.
Last Updated: February 2026
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