Indonesia’s Ministry of Communications and Digital Affairs (Komdigi) has temporarily suspended the operations of Worldcoin (previously branded as World) and its associated service, WorldID, due to alleged regulatory violations. This decision underscores the growing importance of legal compliance in emerging digital markets like Indonesia. The act of Indonesia suspends Worldcoin highlights the need for transparency, accountability, and adherence to data protection laws in the rapidly evolving cryptocurrency and blockchain sectors.
Why Was Worldcoin Suspended?
The suspension stems from a preliminary investigation conducted by Komdigi, which uncovered two significant violations in Worldcoin’s operations within Indonesia.
Firstly, PT Terang Bulan Abadi, the company allegedly responsible for operating Worldcoin in Indonesia, failed to register as an Electronic System Operator (PSE) and lacked the necessary TDPSE (Electronic System Organizer Registration Certificate) for legal operations. Under Indonesian law, all digital service providers must register with Komdigi to ensure compliance with national regulations.
Secondly, Worldcoin was found to be using the registration certificate of another legal entity, PT Sandina Abadi Nusantara, to operate its services. This constitutes a serious breach of transparency and accountability standards, as it misleads regulators and the public about the true operators behind the service.
According to Alexander Sabar, Director General of Digital Space Supervision, the suspension is a preventive measure to mitigate potential risks to the community:
“This freezing is a preventive measure to prevent potential risks to the community. We will also summon PT Terang Bulan Abadi for official clarification in the near future.”
Komdigi plans to summon representatives from the companies involved to address allegations and resolve violations under Government Regulation No. 71 of 2019 on Electronic Systems and Transactions and Ministerial Regulation No. 10 of 2021 .
What Is Worldcoin?
Worldcoin (rebranded World) is a blockchain project co-founded by Sam Altman, CEO of OpenAI, aimed at creating a global digital identity system called WorldID. The project uses a device called the Orb to scan users’ irises, generating unique biometric identifiers. Users are rewarded with Worldcoin tokens (WLD) for participating in the verification process.
Recently, Worldcoin announced plans to bring biometric identity verification to six U.S. cities and distribute 7,500 Orbs nationwide. Despite its ambitious goal of building a decentralized identity verification system, the project has faced controversies globally, particularly over concerns about data privacy and ethical use of biometric data.
Indonesia’s Legal Framework for Digital Activities
Indonesia has been actively developing a robust legal framework to regulate digital activities, particularly in the cryptocurrency and blockchain sectors. Key components of this framework include:
- The Personal Data Protection Law (PDP), enacted in 2022, which sets strict standards for collecting and using personal data, including sensitive biometric information.
- PSE Regulations, which require all digital service providers to register with Komdigi and comply with security standards.
- Oversight by the Commodity Futures Trading Regulatory Agency (Bappebti), which mandates regular reporting from cryptocurrency exchanges and projects.
The suspension of Worldcoin and WorldID aligns with Komdigi’s efforts to safeguard Indonesia’s digital space and ensure compliance with these regulations.
Broader Implications for the Cryptocurrency Industry
Indonesia’s suspension of Worldcoin and WorldID serves as a clear warning to blockchain projects operating in the country. Legal compliance and user privacy protection are non-negotiable, especially in an industry experiencing rapid growth. Projects involving sensitive data, such as biometrics, must prioritize transparency, invest in robust security measures, and maintain open communication with regulators and the public.
Failure to do so can lead to reputational damage, financial losses, and operational disruptions. For instance, the price of Worldcoin’s token (WLD) dropped 0.56% in the last 24 hours, currently trading at $0.9477, reflecting the market’s reaction to the suspension.
Lessons for Blockchain Projects
The Worldcoin case highlights several critical lessons for blockchain and cryptocurrency projects:
- Legal Compliance is Essential : Projects must adhere to local regulations, including registering with relevant authorities and obtaining necessary certifications.
- Transparency Builds Trust : Misleading practices, such as using another entity’s registration, erode trust and invite scrutiny.
- Data Privacy Matters : With stricter data protection laws worldwide, projects handling sensitive information must prioritize user privacy and security.
- Community Engagement is Key : Addressing community concerns and maintaining open communication can help mitigate risks and build long-term credibility.
Conclusions
Indonesia’s suspension of Worldcoin and WorldID underscores the challenges and responsibilities that come with operating in highly regulated environments. As the cryptocurrency industry continues to grow, projects like Worldcoin must strike a balance between innovation and compliance to gain the trust of users and regulators alike.
For now, the suspension acts as a reminder that no project, regardless of its ambition or backing, is above the law. Projects must invest in legal, ethical, and transparent practices to thrive in the global digital economy.
