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Bank Indonesia forbids all parties from engaging in cryptocurrencies

The Bank Indonesia on Saturday has warned against buying, selling, or trading of digital currencies such as bitcoin.

The central bank’s official statement follows the comments from Governor Agus D.W. Martowardojo made last month. Martowardojo said at the time that the BI prohibits the use and processing of digital currencies in order to prevent illicit activities and preserve the rupiah’s status as legal tender in the country.

“Bank Indonesia affirms that virtual currencies, including bitcoin, are not recognized as legitimate instrument of payment, therefore not allowed to be used for payment in Indonesia,” the BI said.

In addition to money laundering and terrorism financing risks, the bank said that cryptocurrencies are also vulnerable to “bubble risks” as their ownership is highly risky and loaded with speculations, particularly because 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.

“[Virtual currencies] can potentially impact financial system stability and cause financial harm to society. All things considered, Bank Indonesia warns all parties not to sell, buy, or trade virtual currency,” the BI added.

“As payment system authority, 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 nonbank institution, to process transactions using virtual currency.”

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