“Bank Indonesia will enact a regulation that confirms the ban on using virtual currency,” announced Pikiran Rakyat. The Republic of Indonesia’s central bank appears to be pushing forward on their often-threatened cryptocurrency ban, which is reported to include “parties that facilitate digital currency transactions.” In turn, at least one media outlet is encouraging holders to “cash in” as a way of avoiding the crackdown.
Indonesia Central Bank Hunts Bitcoin
“We view digital technology as bringing huge changes and high uncertainty to the future economic model, and we, as policy makers, need to anticipate the developments brought about by this fundamental change,” explained Bank Indonesia Governor Agus Martowardojo at the recent Annual Meeting of Bank Indonesia.
Tia Dwitiani Komalasari paraphrases the central banker as saying that “this is done to maintain the sovereignty of the rupiah as legal tender in the Unitary State of the Republic of Indonesia.”
Regional reports regularly point out the now cliched pretexts of cryptocurrencies being used in money laundering and terrorism to buttress Indonesia’s unusually aggressive move against decentralized currencies.
The ban seems to be comprehensive, as they’re also looking to “prevent arbitrage opportunities, unhealthy business practices and business controls by parties outside the legal reach of [the country]that could damage industrial structures,” Mr. Martowardojo detailed.
Indonesia is Southeast Asia’s largest economy, and home to the biggest concentration of Muslims in the world. It also has an enormous unbanked population, whereby as late as 2014 little more than a third of adults held bank accounts. And figures for the country’s poorest point to only 20 percent having access to banking capital. The government in recent years has launched campaigns and initiatives to increase institutional financial literacy.
These basic facts might provide clues as to why its government is working hard to ban bitcoin. Bitcoin effectively limits the need for dependency on state notes as well as state minders.
Ms. Komalasari writes the ban will be “on using virtual currency that has no clear legal aspects, including bitcoin. The agency also prohibits payment system organizers to process and cooperate with parties that facilitate digital currency transactions.”
“Level playing fields,” Indonesia’s regulator warned, “with formal financial institutions need to be maintained, [and]we require all financial technology activists who move in the payment system to register with Bank Indonesia, report on activities, and conduct trials in the regulatory sandbox,” the central banker said (emphasis added).
Coconuts Jakarta didn’t mince its words at the banker’s comments, urging: “It might be necessary for owners of Bitcoin in Indonesia to cash in on their digital asset soon in the face of its impending ban by the government, especially as the value of the cryptocurrency has skyrocketed recently.”
“That said, Bitcoin remains popular in Indonesia, where it was estimated in 2015 that there are US$30,000 to US$50,000 worth of Bitcoin transactions taking place each day,” the online news agency noted.
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Author: C. Edward Kelso