Indonesia bans cryptocurrency payments
Bank Indonesia warns that digital currency ownership is “highly risky and loaded with speculations”.
Southeast Asian central bank, Bank Indonesia, has warned that virtual currencies, including bitcoin, are no longer recognized as a legitimate form of payment and are forbidden for use in all financial transactions.
In December last year, Indonesia’s central bank issued a regulation banning financial technology companies from using cryptocurrencies in their payment systems, and was considering how to regulate the local industry.
In a recent statement posted on the bank’s website, Bank Indonesia advised all payment system operators – principals, switching operators, clearing operators, final settlement operators, issuers, acquirers, payment gateway operators, electronic wallet operators, money transfer operators and financial technology operators –
to cease selling, buying or trading in digital currencies, as it is conflicts with Bank Indonesia regulations.
Bank Indonesia said it must maintain financial system stability and consumer protections and that digital currencies have no official administrator, therefore ownership is “highly risky and loaded with speculations”.
“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,” the central bank’s communications department said in its statement.
“All things considered, Bank Indonesia warns all parties not to sell, buy, or trade virtual currency.”
Indonesia isn’t the only country debating the legalities of cryptocurrencies. South Korea has considered a nationwide shutdown of its crypto markets but has not finalized any measures to outlaw trading as yet.
Last week, South Korea’s Financial Intelligence Unit (KoFIU) and Financial Supervisory Service (FSS) began carrying out joint inspections on six commercial banks offering trading accounts to cryptocurrency exchanges. The investigations will determine whether the institutions comply with South Korea’s anti-money laundering laws and whether they have appropriate measures in place to verify cryptocurrency customers’ identification.
The United Kingdom’s Financial Conduct Authority (FCA) warned consumers in November regarding contracts for differences (CFDs), including financial spread bets, with cryptocurrencies as the underlying investment.
“These products are extremely high-risk, speculative products,” the FCA said in its statement.
Over the years, the Reserve Bank of India has cautioned “users, holders and traders” of virtual currencies regarding the potential economic, financial, operational, legal and security related risks associated.
In September 2017, the Central Bank of the Russian Federation said crypto-currencies were issued by anonymous entities. As a result of their anonymous nature, “citizens and legal entities may be involved in illegal activities, including legalization (laundering) of proceeds from crime and financing of terrorism.”