As recently reported by Core Media, South Africa is turning to bitcoin to escape economic woes. Not every nation is as bitcoin-friendly as South Africa, however, as Indonesia’s central bank, Bank Indonesia (BI) recently issued a warning about cryptocurrency trading.
According to Reuters, the financial institution warned investors about the risk of potential losses, and even a potential threat to the financial system’s stability. As reported, BI has in the past made it clear that cryptocurrencies aren’t recognized as a legal medium of exchange, and even shut down bitcoin processors.
In a statement, BI spokesman Agusman restated what most central bank say about bitcoin: that it’s a risky investment, and that there’s no central authority controlling it. He said:
“The ownership of virtual currencies is high risk and prone to speculation because there is no authority who takes responsibility, there is no official administrator and there is no underlying asset to be the basis for the price.”
Per Agusman, cryptocurrencies like bitcoin can negatively affect society as they can be used to launder money or fund terrorism. He added that cryptocurrencies are currently in a bubble and aren’t a legal medium of exchange. His words, he says, are a reminder of the risks of investing in cryptocurrencies, as the public will be the one to suffer the losses if the bubble bursts.
He continued, adding that Bank Indonesia is obliged to “protect consumers and protect them from a bubble.” When asked if these statements could stir panic among those who already put their money in the cryptocurrency ecosystem, he said that they didn’t consult the financial institution when buying, and asked for help in making “people understand.”
Bank Indonesia on bitcoin
Indonesian authorities have in the past made it clear they aren’t bitcoin fans. Bank Indonesia’s Director of Payment System Policy Department, Eny V Panggabean has said that the central bank won’t recognize bitcoin as a currency. He added that using bitcoin is forbidden.
According to Bitcoin.co.id, an Indonesian cryptocurrency exchange, bitcoin is currently trading at 207.7 million rupiah, equivalent to about $15,566. At press time, one bitcoin is currently trading at an average of $14,090, making it clear the country has a hefty premium, potentially caused by the central bank’s moves.
Bank Indonesia’s attacks on bitcoin date back to 2014, when the financial institution deemed bitcoin and other virtual currencies an invalid payment method in the country.