Bank Indonesia bans virtual currency as means of payment

BITCOIN - Bank Indonesia (BI) has banned the use of virtual currency, including bitcoin, as a means of payment in the country.

Based on Law No.7 of 2011 on Currency, any transaction intended to make payments or settle other obligations using currency or other financial transactions made in the Indonesian territory must use the rupiah, Executive Director of the BI Communication Department Agusman stated here on Saturday.

Holding virtual currency is very risky, as no authority is responsible for it, he remarked.

The central bank also noted that virtual currency does not have an official administrator, underlying assets, or price reference, and it has a highly fluctuating trade value.

Hence, virtual currency is highly susceptible to the risks of the bubble phenomenon, money laundering, and terrorism funding, he pointed out.

"As a result, it can influence stability of the financial system and harm the public. Hence, Bank Indonesia warns all parties against selling, buying or trading virtual currency," he stated.

As a payment system authority, the central bank has banned all payment system service providers, including principal, switching provider, clearing provider, final settlement provider, issuer, acquirer, payment gateway, fund transfer provider, and financial technology provider, either banking or non-banking institutions, from processing payment transactions using virtual currency.