Bank of Indonesia Considers Banning Trading of Digital Currencies
While digital currencies are plummeting in value, in what many have referred to as the ‘Black Friday’ of crypto, governments are continuing their regulatory efforts.
Recent reports now indicate that the Bank of Indonesia has issued a warning against the purchase, selling and trading of cryptocurrencies. The statement released by the central bank can be considered a follow-up to the statements made by Governor Agus Martowardojo. Back then, the Governor stated that, the Bank of Indonesia prohibits both the use and processing of digital assets. The reason behind this would be trying to prevent illegal activities, but also to preserve the national currency’s status as the only legal tender available in the country.
As justification for its latest decision, the central bank stated that the regulatory efforts are mostly due to the money laundering and illegal financing risks associated with digital currencies. However, the bank also believes that crypto assets are subject to the risk of being a bubble, thus leading to investors losing their money given a bubble pop.
According to the bank, “Digital 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 (…) 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.”
At this time, the bank has not made any other statements to clear up the confusion generated by its latest warning. Is this a move to completely ban individuals and companies from buying, selling and trading digital currencies, or just a comment meant to raise awareness?
Based on everything that has been outlined so far, regardless of the legislative effort outcome, it is likely that the crypto community in Indonesia will be affected, following the latest statements. However, most people hope that the warnings will take the form of stricter regulation, rather than an outright ban, which would disadvantage the community.