Bank Indonesia, Unitary State of the Republic of Indonesia’s central bank, has issued perhaps its bluntest statement yet on curbing the use of cryptocurrency, affirming a hardening stance on the popularity of what it refers to as “virtual currency” such as bitcoin.
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Bank Indonesia Warns All Parties
Bank Indonesia Warns To All Parties To Not Sell, Buy or Trade Virtual Currency is the title of today’s missive from Bank Indonesia by way of its Department of Communications. It “affirms that virtual currency including bitcoin is not recognized as a valid payment instrument, so it is prohibited to be used as a means of payment in Indonesia.”
Bank Indonesia (BI) is the Republic’s central bank, and as such it has been unusually active and belligerent with regard to cryptocurrency. Its governor issued statements late last year causing regional media to urge retail holders to sell back into fiat ahead of a ban. That followed Fall’s shutdown of bitcoin payment providers and businesses restructuring in an effort to get ahead of coming regulation. And just prior, BI had yet again reaffirmed its distaste for crypto, pushing advocates to insist the bank was denying a marvel of technological innovation. BI’s pronouncements have routinely contrasted with impressions on the street, as Indonesians do seem to have an appetite for the decentralized currency.
BI wants it crystal clear all obligations paid in money or “other financial transactions conducted in the Territory of the Unitary State of the Republic of Indonesia shall be obliged using Rupiah.” Decrees of this sort appear to be driving Indonesians away from above-ground exchanges, for obvious reasons, and into more peer-to-peer arrangements such as Localbitcoins.
“Ownership of virtual currency is very risky and full of speculation because there is no authority responsible,” the central banker continues, “there is no official administrator, there is no underlying asset underlying virtual currency price and trading value is very volatile so vulnerable to the risk bubble and prone to be used as a means of washing money and financing of terrorism, so that it can affect the stability of the financial system and harm the public. Therefore, Bank Indonesia warns all parties not to sell, buy or trade virtual currency,” it concludes.
“Bank Indonesia,” they sternly remind, “prohibits all payment system service providers (principals, switching organizers, clearing organizers, final settlement providers, issuers, acquirers, payment gateways, electronic wallet operators, fund transfer providers) and Financial Technology providers in Indonesia both Banks and Institutions Bank to process payment transactions with virtual currency,” citing laws and regulations.
Undoubtedly, BI’s 13 January 2018 reminder is to ride the wave of publicity South Korean regulators garnered by floating the word “ban.” Mainstream press ran with the passing idea, and prices regionally as well as internationally dropped double digits, and fast.
As of this writing, the country’s most popular exchange, PT Bit Coin Indonesia, closing in on a million users, remains up and running.
What are your thoughts about such pronouncements? Let us know in the comments section below.
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