Indonesian central bank governor Perry Warjiyo announced that Bank Indonesia would prohibit the use of cryptocurrencies as a payment option. The announcement, made by Warjiyo on June 15, also suggests cryptocurrencies would be banned for “other financial services tools,” despite the governor not declaring exactly which services.
This is yet another crackdown on cryptocurrencies by the Indonesian government, as the governments banned 26 investment businesses/peer-to-peer lending platforms because they were unlicensed by the Indonesian laws.
In fact, cryptocurrencies are not recognized as a means of payment by the constitution or by central bank laws, meaning that receiving a license is nearly an impossible task to achieve. Warjiyo also noted that he expects “financial institutions to follow this policy accordingly.”
In order to ensure law compliance, the Indonesian government is mobilizing watchdog teams to ensure companies are compliant with the recent ban.
Tongam Lumban Tobing, the head of the task force behind the widespread ban, went a step further, declaring one of the biggest crypto exchanges to date, Binance, as illegal. According to Tongam, banning Binance is “because it did not have permission from the competent authorities.”
The saga between Binance and Indonesian financial regulators date back to October 2020, as Tongam said the task force issued a ban on Binance on October 27, 2020, and it would “continue to be banned as long as there was no permission from the Commodity Futures Regulatory Agency (Bappebti)”.
Meanwhile, financial experts noted that Indonesia would not ban cryptocurrencies completely, as legislators are preparing a series of taxation policies since cryptocurrencies are considered as commodities.
However, the holding and trading of cryptocurrencies are still legal, with only using cryptos as a payment option being banned. The moves by Bank Indonesia closely mimic the actions, taken by the Chinese government to stop the use of cryptos for payment until a CBDC project comes to life.
The same case is also evident for Indonesia, as its central bank is preparing the development of its own CBDC, focusing on speeding up digital payments. Indonesia joins China, France, Japan, Canada, and other nations, developing or planning to develop a central bank-issued digital currency. Central bank digital currencies (CBDC) are seemingly more and more the main focus of governments and central banks, as they strive to maintain sovereignty on legal tender.
Furthermore, the Bank for International Settlements (BIS) has issued several warnings about cryptocurrencies and their ongoing volatility issues, while supporting the research and developments of CBDCs. The authority has called for global cooperation CBDCs creation and deployment, declaring CBDCs as a “novel idea that will take time to fully implement.”