The Bank of Indonesia, the country’s central bank, recently announced that bitcoin isn’t an officially recognized payment method in Indonesia. The announcement led Indonesian bitcoin payment processors to shut down their platforms, but exchanges in the country were notably unaffected.
Bank of Indonesia governor Agus Martowardojo pressed that bitcoin isn’t a legal payment method in Indonesia. He stated that he hopes he won’t see any transgressions in the country. Prior to his words, it was understood that as long as payments were denominated in Indonesian rupiah (IDR) it didn’t matter whether bitcoin was or wasn’t involved.
According to media reports, the central bank’s announcement led to the closure of two prominent bitcoin businesses in the country: Toko Bitcoin and BitBayar. Essentially, Toko Bitcoin allowed users to purchase prepaid phone or electricity vouchers using the cryptocurrency and was forced to stopped accepting it as payment, while BitBayar is an Indonesian alternative to PayPal or BitPay.
The Bank of Indonesia’s announcement merely referred to bitcoin, but most assume the ban extends to all cryptocurrencies. Speaking to Bitsonline, Oscar Darnawan, founder, and CEO of PT Bitcoin Indonesia stated:
“There have not been any direct requests from the Bank of Indonesia to Bitcoin Indonesia to close down these two websites. However, as both sites enter the grey area that the statement has created, we have decided to comply with the Indonesian regulator because our exchange member is our main concern.”
Darnawan added that the country’s central bank is concerned with bitcoin’s usage as a payment mechanism, and doesn’t have a problem with it as a safe haven asset. Per his own words, the exchange meets with the Financial Services Authority to make sure it follows regulations.
Bitcoin in Indonesia
In the past, Bank of Indonesia’s Director of Payment System Policy Department, Eny V Panggabean, stated that the financial institution will not recognize bitcoin as a currency. Moreover, he added that the use of bitcoin as a currency is forbidden, reiterating a position made back in 2014 by the institution, deeming bitcoin and other virtual currency an invalid payment method in Indonesia.
Indonesia has a relatively large bitcoin market. According to data from Cryptocompare, bitcoin to IDR trading comprises the ninth largest national market in the last 24 hours. Its volume currently accounts for 0.27% of bitcoin’s total trading volume.
According to LocalBitcoins, in some of the country’s biggest cities, bitcoin is trading at as much as $6,200, even though the global average is about $5,710 at press time. Despite the central bank’s announcement, bitcoin wasn’t banned in Indonesia and its business as usual for the country’s exchanges.