Governments and financial organizations across the globe have been insistently attempting to crack down on bitcoin and other virtual currencies. Most banks and government officials are against the concept of a decentralized currency, and fear not being able to control taxes and individual wealth of their citizens. As a result, over the past years, there has been multiple bans, regulations, laws, advice, recommendations – most being against cryptocurrencies – from nations and organizations all around the world.
It is now Indonesia’s turn to make the headlines regarding cryptocurrencies and trading of digital financial assets. The Central Bank of Indonesia, or Bank Indonesia (BI), recently came out urging individuals to stay away from cryptocurrencies. The bank claims that people should avoid purchasing, owning, and trading them. It seems that BI is worried about the nature of the speculative market and the volatility of it, claiming that the digital assets “are prone to forming asset bubbles”. The concern that the bubble may pop at any moment is big for Bank Indonesia. Furthermore, BI is concerned about cryptocurrency-related illegal activities and stated that these virtual currencies can also be used as a “method for money laundering and terrorism funding, so it has the potential to affect financial-system stability and harm the public”. As mentioned previously on CryptoAnalyst, this idea mostly stems from the Silk Road era, where bitcoin was used to purchase drugs, weapons, and other illicit items.
Indonesia and the Central Bank had previously come out against bitcoin and other currencies, declaring that they were not regulated, high-risk and highly speculative. As a result, the Indonesian government has banned cryptocurrency payments and any form of transactions to buy or sell items, claiming that they were not a “legal medium of exchange”. However, exchanges and trading are still authorized in the country. One of the biggest crypto exchanges in Indonesia is called PT Bitcoin Indonesia.
This is certainly very similar to what other countries like South Korea, China, India and members of the European Union have claimed in the recent weeks regarding cryptocurrencies. These nations are becoming increasingly worried and want to avoid individuals losing a lot by investing in these markets. Money-laundering, illegal activities, and terrorism are also main concerns that these governments have. Taxation is also a critical issue faced by these countries, as they still struggle to find efficient ways to tax and regulate cryptocurrency-related income. As expected, 2018 is already a crucial year for crypto as multiple entities are looking to either enter the market, regulate it, or control it.
TLDR: The Central Bank of Indonesia, Bank Indonesia has urged its customers and the population to avoid purchasing, trading and investing in cryptocurrency. This is because they fear that they are unstable, high-risk, too speculative and could be used for illegal activities.