The Indonesian central bank recently revealed that they will start preventing financial technology (fintech)-based companies from using cryptocurrency transactions on their platform, despite the rapid increase in interest in cryptocurrencies all over the world.
Deputy Governor of the Indonesian Central Bank, Sugeng, told several reporters that the bank will start implementing its latest ban on the 1st of January 2018. However, Sugeng emphasized that the ban will not affect cryptocurrency trading. Sugeng added that this ban forms part of a new set of regulations pertaining to fintech firms, especially those seeking licenses from the central bank.
According to the head of the Indonesian Central Bank’s fintech department, Junanto Herdiawan, cryptocurrency is still too volatile for any financial regulator or financial institution to guarantee investors any degree of safety. Herdiawan added that the market is hard to monitor and predict, which makes the risks even higher.
Indonesia has a relatively small cryptocurrency market, especially compared to the markets of the US or Japan, however, the latest move is likely to stifle the market even more and discourage investors, which potentially could cost the industry millions of dollars. Previously, the central bank of Indonesia released a statement which noted that the rupiah is the only recognized currency in the country. The latest set of regulatory policies only seems to reinforce that sentiment.
According to Indonesian lawmakers, the main concern regarding cryptocurrency is its impact on the broader financial landscape as a whole. The cryptocurrency industry, according to Indonesian experts, poses serious threats to both a country's monetary policy as well as inflation policies. In addition, the Indonesian central bank stated that bitcoin, and other altcoins, could facilitate nefarious activities such as terrorist funding, drug trade, and human trafficking.
However, since bitcoin’s rise in growth and popularity, the international market has been taking note, and this is also true in Indonesia. According to the country’s Finance Minister, Sri Mulyani Indrawati, Indonesian investors are eager to participate in the bitcoin market. However, Indrawati noted that the government aims to protect its citizens in case bitcoin proves to be an investment bubble.
In addition, assistant governor of the country’s central bank, Dody Budi Waluyo, stated that the bank is worried about the possible impact that a largely unregulated currency could have on both the current economic landscape, as well as its contribution to inflation rates. Earlier this week, Waluyo stated that bitcoin's unregulated and decentralized nature could require the bank to lend it some liquidity. This, in turn, could threaten the country's economic stability.
Despite the bank’s taciturn attitude, the country’s prominent bitcoin exchanging platform, Bitcoin Indonesia, is still largely unaffected by the country’s suggested ban. According to the platform’s CEO, Oscar Darmawan, the company is still continuing business as usual.
According to Darmawan, the Indonesian market is minuscule compared to the Japanese market. Currently, the Indonesian market is only around 1% of the Japanese market. Darmawan confirmed that Bitcoin Indonesia currently has 650,000 members.
However, not all government officials are in favor of the proposed ban. Several Indonesian leaders are supportive of cryptocurrencies, including Tom Lembong, the Indonesian investment board chief. According to Lembong, cryptocurrency could be the economic world's long-awaited solution because of its decentralized nature.
Deputy Governor of the Indonesian Central Bank, Sugeng, told several reporters that the bank will start implementing its latest ban on the 1st of January 2018. However, Sugeng emphasized that the ban will not affect cryptocurrency trading. Sugeng added that this ban forms part of a new set of regulations pertaining to fintech firms, especially those seeking licenses from the central bank.
According to the head of the Indonesian Central Bank’s fintech department, Junanto Herdiawan, cryptocurrency is still too volatile for any financial regulator or financial institution to guarantee investors any degree of safety. Herdiawan added that the market is hard to monitor and predict, which makes the risks even higher.
Indonesia has a relatively small cryptocurrency market, especially compared to the markets of the US or Japan, however, the latest move is likely to stifle the market even more and discourage investors, which potentially could cost the industry millions of dollars. Previously, the central bank of Indonesia released a statement which noted that the rupiah is the only recognized currency in the country. The latest set of regulatory policies only seems to reinforce that sentiment.
According to Indonesian lawmakers, the main concern regarding cryptocurrency is its impact on the broader financial landscape as a whole. The cryptocurrency industry, according to Indonesian experts, poses serious threats to both a country's monetary policy as well as inflation policies. In addition, the Indonesian central bank stated that bitcoin, and other altcoins, could facilitate nefarious activities such as terrorist funding, drug trade, and human trafficking.
However, since bitcoin’s rise in growth and popularity, the international market has been taking note, and this is also true in Indonesia. According to the country’s Finance Minister, Sri Mulyani Indrawati, Indonesian investors are eager to participate in the bitcoin market. However, Indrawati noted that the government aims to protect its citizens in case bitcoin proves to be an investment bubble.
In addition, assistant governor of the country’s central bank, Dody Budi Waluyo, stated that the bank is worried about the possible impact that a largely unregulated currency could have on both the current economic landscape, as well as its contribution to inflation rates. Earlier this week, Waluyo stated that bitcoin's unregulated and decentralized nature could require the bank to lend it some liquidity. This, in turn, could threaten the country's economic stability.
Despite the bank’s taciturn attitude, the country’s prominent bitcoin exchanging platform, Bitcoin Indonesia, is still largely unaffected by the country’s suggested ban. According to the platform’s CEO, Oscar Darmawan, the company is still continuing business as usual.
According to Darmawan, the Indonesian market is minuscule compared to the Japanese market. Currently, the Indonesian market is only around 1% of the Japanese market. Darmawan confirmed that Bitcoin Indonesia currently has 650,000 members.
However, not all government officials are in favor of the proposed ban. Several Indonesian leaders are supportive of cryptocurrencies, including Tom Lembong, the Indonesian investment board chief. According to Lembong, cryptocurrency could be the economic world's long-awaited solution because of its decentralized nature.