Central Bank of Indonesia Warns Cryptocurrencies Not Legitimate for Payment

Global central bankers are raising an alert in regards to the cryptocurrency market due to the high risks involved. The latest to join the group – Indonesia Bank. Central Bank of Indonesia Warns Cryptocurrencies Not Legitimate for Payment in its public press release on Saturday.

16 January, AtoZForex The central bank of Indonesia has warned that digital currencies might not be used for payments in the country. In its official press release that was published on Saturday, the Bank Indonesia has stated that cryptocurrencies are not a “legitimate instrument of payment” in the country.

Central Bank of Indonesia Warns Cryptocurrencies Not Legitimate for Payment

The officials have noted that cryptocurrencies do not comply with the 2011 currency act, as they are not issued by the Republic of Indonesia. The formal currency act states:

“Financial transactions conducted within the territory of the Republic of Indonesia, has to be fulfilled with Rupiah.”

Thus, the central bank has ruled out that payment firms are not allowed to make digital currency transactions. The official statement from the central bank reads:

“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 non-bank institution, to process transactions using virtual currency, as stated in Bank Indonesia Regulation No. 18/40/PBI/2016 on Implementation of Payment Transaction Processing and Bank Indonesia Regulation No. 19/12/PBI/2017 on Implementation of Financial Technology.”

It is worth to note that the warning does not mention cryptocurrency exchanges.

Indonesia Cryptocurrency ban question

The news about Indonesian central bank’s ruling comes following the bank’s statement from December. That time, the bank has revealed that it was considering the regulations that would imply the outlaw of cryptocurrency transactions from 2018.

On the 20th of December 2017, the bank has issued a new regulation on the Implementation of Financial Technology. The regulation covered such topic as bitcoin’s potential use in terrorism financing, money laundering, and drug trafficking.

In its latest note to the public, the central bank of Indonesia has also cautioned investors about risks involved with buying, selling or trading cryptocurrencies. The representatives of the bank also noted that the cryptocurrencies are “highly volatile” and they do not have support from an authority. The note adds:

“This means that virtual currencies are vulnerable to bubble risks and susceptible to be used for money laundering and terrorism financing, therefore can potentially impact financial system stability and cause financial harm to society.”

Therefore, the central bank of Indonesia has joined a myriad of other central banks in the mission to warn the public about cryptocurrencies.

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