Indonesia Fintech Regulatory Updates - Dec 2017
Indonesia central bank warns over cryptocurrencies
Indonesia’s central bank issued a warning about trading in cryptocurrencies because of risk of losses to public and a potential threat to the financial system stability. The lack of authority of the currency make it high-risk and prone to speculation. Bank Indonesia (BI) previously said that cryptocurrencies were not recognised as a legal medium of exchange and cannot be used as a means of payment in Indonesia. Indonesia’s agency overseeing operation of financial service firms, OJK, banned firms in adopting cryptocurrencies in domestic transactions. This abides by Law No. 7/2011 of the country that stipulates national currency rupiah is the only authorized currency allowed for transactions in Indonesia.
Central bank, the Bank of Indonesia is now taking a firm stance against cryptocurrencies as they believe cryptocurrencies are prone to forming asset bubbles and tend to be used as a method for money laundering and terrorism funding. Bank Indonesia has stopped financial technology companies using cryptocurrencies for transactions in January but does not prohibit trading of digital tokens itself. Of recent was the voluntary closure of 2 cryptocurrency exchanges – BitBayar and TokoBitcoin.
BI tightens up on cryptocurrencies with police
Bank Indonesia (BI) has teamed up with other state institutions, such as the local police to reduce payment activities using Bitcoin.
As the country’s payment system regulator, BI can only take measures on the payment-related side in which payment providers connect cryptocurrency users through gateways. Other functions such as exchange and mining are the responsibility of other authorities. BI also prohibited banks and financial institutions from receiving virtual currency payments to prevent cryptocurrency holders from liquidating their assets into rupiah, and only do so in countries who allow. Currently it is working with the police to enforce crypto payment policies.
Bitcoin under increasing scrutiny on island of Bali
Bitcoin is under heavy surveillance on Bali as it has appeared to become a haven for Bitcoin transactions. Bank Indonesia (BI) started investigating alleged bitcoin transactions made in Bali after it found indication of significant activity on social media. Transactions are made by foreigners who stay there for extended period of time. The bank has banned monetary transactions using BI owing to the fact that only one currency is valid in Indonesia, namely rupiah.