Indonesia to Restrict Bitcoin Trading

While Bitcoin coexists with the highly developed financial system, countries with insecure economies move in faster to crack down on cryptocurrencies.

The list of countries that are hawkish of Bitcoin or outright ban it has something in common: up and coming economies that have just emerged from decades with a large grey sector. Russia is a prominent example, where cryptocurrencies saw years of outright repression. Morocco is the most recent country to consider an outright ban. Ecuador and Bolivia have long-standing bans, as well as Bangladesh and Nepal. The reasons for the ban vary, but the biggest concerns are about money laundering.

Macedonia and Kyrgyzstan have similar stories- long years of economic struggle, a large grey sector and skepticism of anything related to potential financial scams. 

But now, a new batch of countries is joining in attempts to curb the spread of Bitcoin. Indonesia, a nation with a conservative streak, plans to ban all cryptocurrency transactions. Local Indonesian media, cited by FinanceMagnates, has pointed to a possible blockage for providing money services to cryptocurrency users.

The refusal to provide a bridge to cashing out is nothing new in Southeast Asian countries, where a booming cryptocurrency community of exchanges and projects clashes with local banks, who are reluctant to provide accounts and see cryptocurrencies as competitive.

Agus Martowardojo, Governor of Bank Indonesia, said 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," said Martowardojo.

In effect, the language of the ban means Indonesians who own Bitcoin will not have access to exchanges any time soon. Such a move may do what has happened in the past to other countries with limits on legal exchanges- owners would resort to LocalBitcoins for even more speculative and risky trading.

So far, very few countries have gone directly after the Bitcoin network, walling off nodes or banning local mining. And experience has shown that when it comes to Southeast Asia, neighboring countries keep offering options.