Indonesia’s central Bank has warned its nationals to avoid using and trading in cryptocurrencies like bitcoin due to high risk of losses and a potential threat to the financial system.
How serious is Indonesia move on cryptocurrencies?
A few months back, Bank Indonesia (BI) has said that cryptocurrencies could not be recognized as a legal medium of exchange. Hence, they can’t be used as a mode of payment in Indonesia.
Now, Bank Indonesia is taking a firm stance and warning against cryptocurrencies. They are basically urging all the parties to refrain from owning and trading in tokens.
On Friday, the spokesman of Bank Indonesia, Agusman said in a statement that:
“The ownership of virtual currencies is high risk and prone to speculation because there is no authority who takes responsibility, there is no official administrator and there is no underlying asset to be the basis for the price”.
He also mentioned that virtual currencies can also be used in terrorism funding and money laundering. These factors can impact the stability of the financial system and further cause huge losses to the society.
He further explained:
“(Cryptocurrency) is not a legal medium of exchange. We remind (people of) its risks. When the risks occur, the losses will be borne by the public. We are obliged to protect consumers and protect them from a bubble,”
The central bank also emphasized that owning virtual currencies is not only risky but inherently speculative. This kind of a move puts light on the challenge faced by the regulators in order to manage the potential risks of cryptocurrency while lacking the authority to prohibit its use.
On asked, if such statements made by authorities can stir panic among the community that has already invested in cryptocurrencies.
The spokesman said:
“They didn’t consult with us when buying….please help us make the people understand.”
Indonesian authorities have been vocal and serious about their warnings. As a step forward, last month only, Bank Indonesia issued the regulation in which, the uses of cryptocurrencies by the financial technology companies which are involved in payment systems are banned. The authorities also clarified that they are examining if there is a need to regulate the trading on virtual currency exchanges.
World authorities coming together on Bitcoin regulation
When this week, South Korea authorities said regulators were preparing to ban cryptocurrency trading, the bitcoin prices crashed temporarily. While China has already drafted proposals to discourage bitcoin mining. Though Bank Indonesia is following the ban on specific companies using cryptocurrency, they don’t prohibit the trading of digital tokens. Moreover, PT Bitcoin Indonesia, which is a virtual currency exchange with an impressive 940,000 members, doesn’t fall under the supervision of this ban.
Who do you think will be the next country to put regulations on cryptocurrency?
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I am an associate content producer for the news section of Coingape. I have previously worked as a freelancer for numerous sites and have covered a dynamic range of topics from sports, finance to economics and politics.