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The uncertainties of cryptocurrencies
BI has estimated the existence of more than 550,000 domestic users, transacting in more than 1,300 varieties of cryptocurrency.
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BI has estimated the existence of more than 550,000 domestic users, transacting in more than 1,300 varieties of cryptocurrency. (Shutterstock/File)
B
ank Indonesia (BI) has again reaffirmed its resistance toward the use of bitcoin and other cryptocurrencies in Indonesia. In a recent press statement released in January, BI has given a clear warning to the public not to use, buy or trade any forms of cryptocurrency, and has also displayed the risks of virtual currency transactions.
This skepticism from our central bank is very disadvantageous for any virtual currency user in Indonesia and worldwide. Even though cryptocurrencies are still considered an unauthorized payment instrument in Indonesia, it is highly expected to bring benefits to the modern digital economy.
A cryptocurrency is a decentralized peer-to-peer digital currency that uses cryptography to generate currency units and verify and secure the transfer of funds. It operates independently of a central bank or monetary authority.
BI has estimated the existence of more than 550,000 domestic users, transacting in more than 1,300 varieties of cryptocurrency. This is an important indication of the potential presence of cryptocurrency in Indonesia, and the number is strongly believed to increase in the future.
Although the ownership of a cryptocurrency such as Bitcoin and Ethereum is not considered yet illegal in Indonesia, the transaction of cryptocurrency and its use as a payment instrument is fully prohibited.
This prohibition is regulated by two BI regulations, the first in Article 34 of Regulation No. 18/40/PBI/2016 on the processing of payment transactions, and the second in Article 8 of Regulation No. 19/12/PBI/2017 on the implementation of financial technology. Both regulations strictly prohibit the use of any kind of cryptocurrency in any payment systems made and used by payment services providers and financial technology players.
The reason behind this policy is to prevent illicit activities that utilize cryptocurrency, such as money laundering or terrorism financing, as well as to maintain the sovereignty of the rupiah as the sole legitimate currency in Indonesia.
