In a fresh warning issued over the weekend the Indonesian Central Bank has affirmed that cryptocurrencies such as Bitcoin (EXANTE: Bitcoin) “are not legitimate instruments” and are not allowed to be used for payment in Indonesia.
The bank warned against trading in virtual currencies, citing the practice's susceptibility to abuse by criminals and price volatility.
“Ownership of virtual currency is highly risky and loaded with speculations, considering there is no authority responsible, no official administrator, no underlying assets to base the virtual currency price, and that the trade value is highly volatile,” the regulator said in a statement.
It added that “virtual currencies are vulnerable to bubble risks, and susceptible to be used for money laundering and terrorism financing,” and therefore can potentially impact financial system stability and cause financial harm to society.
Eni Panggabean, the head of payment system policy and oversight at Bank Indonesia, said that, unlike some cryptocurrency-friendly authorities like Japan, Indonesia's vulnerability to crimes like terrorism made it more wary about Bitcoin and other virtual currencies.
“There are some data pointing to Bitcoin uses in crimes - due to the use of pseudonyms. Cryptocurrencies are really comfortable for criminals because their identities can stay concealed transactions. It's really hard to trace them," Nikkei Asean Review quoted Panggabean as saying.
Last month Bank Indonesia issued a regulation banning use of cryptocurrencies by financial technology companies involved in payment systems, and said it is examining whether there’s a need to regulate trading on virtual currency exchanges.