January 15, 20183min650

Bank Indonesia banned payments with cryptocurrencies

Bank Indonesia published a press release on Saturday.  It stated that cryptocurrencies are not a legitimate method of payment in the Republic of Indonesia.

“Financial transactions conducted within the territory of the Republic of Indonesia, has to be fulfilled with Rupiah,” the currency act states.

As a result, the central bank said that payment firms are not allowed to make virtual currency transactions.

The central bank states:

“Bank Indonesia affirms that it forbids all payment system operator (principal, switching operator, clearing operator, final settlement operator, issuer, acquirer, payment gateway operator, electronic wallet operator, money transfer operator) and financial technology operators in Indonesia, both bank and non-bank institution, to process transactions using virtual currency, as stated in Bank Indonesia Regulation No. 18/40/PBI/2016 on Implementation of Payment Transaction Processing and Bank Indonesia Regulation No. 19/12/PBI/2017 on Implementation of Financial Technology.”

The central bank predicted that they will ban Bitcoin transactions in early December last year.

 

On the 20th of the same month, the bank issued a new regulation on Implementation of Financial Technology . Because of concerns over Bitcoin’s potential use in terrorism financing, money laundering and drug trafficking.

In its latest warning, Bank Indonesia also warned “all parties” that buying, selling or trading cryptocurrencies come with “high risks,” . They are, they say, “highly volatile” and do not have backing from an authority, or underlying assets to support prices.

The note says:

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

 

With this new notice the Central Bank Indonesia joins a number of global central banks in issuing warnings. As the prices of cryptocurrencies have soared amid what many in traditional finance have labelled a bubble. Countries including the U.K., India, Russia and more have recently cautioned investors and traders over the perceived risks involved in cryptocurrencies.

 


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