Bank Indonesia Doubles Down On Its Disdain Of Cryptos

Bank Indonesia has released a statement noting again that cryptos have no place in its country.

The warnings about cryptocurrencies continue, with the latest coming from Bank Indonesia. 

It had already warned about cryptos, but followed up with a statement released Saturday. In it, the bank affirmed that virtual currencies, including Bitcoin, are not recognized as legitimate instruments of payment, therefore they are not allowed to be used for payments in Indonesia.

The statement reveals reasons for its denouncement that are in line with many others who don’t care for cryptos. It specifically states:

Ownership of virtual currency is highly risky and loaded with speculations, considering there is no authority responsible, no official administrator, no underlying assets to base the virtual currency price, and that the trade value is highly volatile. 

Terrorism and Money Laundering

It goes on to state that virtual currencies are “vulnerable to bubble risks, and susceptible to be used for money laundering and terrorism financing, therefore they can potentially impact financial system stability and cause financial harm to society.” 

With all this being said, Bank Indonesia warns all parties not to sell, buy, or trade virtual currencies. Officials explain that the conclusion is in line with its currency laws, which state that currency shall be money issued by the Republic of Indonesia. 

Furthermore, every transaction that has the purpose of payment, or other obligations which need to be fulfilled with money, or other financial transactions conducted within the territory of the Republic of Indonesia, has to be fulfilled with Rupiah. 

List of those affected

It added that it forbids the use of cryptos. There is a laundry list of operators that are forbidden. They include:

  • switching operators 
  • clearing operators 
  • final settlement operators
  • electronic wallet operators
  • money transfer operator
  • financial technology operators
  • bank and nonbank institutions

As a monetary financial system, and payment system authority, Bank Indonesia boasts being committed to continuously maintaining the stability of its financial system. Like other financial systems, it also boasts being a champion of consumer protection, and preventing practices of money laundering and terrorism financing.

In December, we reported its Governor, Agus Martowardojo, saying the sovereignty of the Indonesian Rupiah will not be undermined, and the regulator will curb "arbitrage opportunities, unhealthy business practices and business controls.”

"Level playing fields with formal financial institutions need to be maintained, we require all financial technology activists who move in the payment system to register with Bank Indonesia, report on activities, and conduct trials in the regulatory sandbox."