BI bans Bit­coin, de­mands fin­tech firms to regis­ter

The Jakarta Post - - BUSINESS - Winny Tang

Bank In­done­sia (BI) has taken a strong stance against the wide­spread use of vir­tual cur­ren­cies, in­clud­ing Bit­coin, as a method of pay­ment due to the fear of volatil­ity they can bring to the econ­omy.

The pro­hi­bi­tion has been set in the cen­tral bank’s new reg­u­la­tion, called the PBI No. 19/12/ PBI/2017 on the im­ple­men­ta­tion of fin­tech, slated to come into ef­fect on Jan. 1, 2018.

In the new reg­u­la­tion, which was pub­lished on Thurs­day, BI de­clared cryp­tocur­ren­cies as il­le­gal due to their high price volatil­ity that could pose huge risks to In­done­sia’s econ­omy, said BI Deputy Gov­er­nor Su­geng.

“Since the begin­ning, BI has warned that the only le­gal pay­ment tool in In­done­sia is the ru­piah,” he added on Thurs­day.

“Other pay­ment tools such as vir­tual cur­ren­cies that are ex­tremely volatile would have a neg­a­tive im­pact on our econ­omy.”

With a high de­gree of price fluc­tu­a­tions in vir­tual cur­ren­cies, Su­geng said con­sumers would not feel pro­tected as they would have to bear huge in­vest­ment un­cer­tain­ties. BI had de­clared that if in­vestors ex­posed them­selves to such risks, the cen­tral bank would not be re­spon­si­ble for any losses in­curred, he said.

“Imag­ine if vir­tual cur­ren­cies are re­leased [legally] on the mar­ket. The prices may peak, then drop dras­ti­cally. Peo­ple could be­come re­ally wealthy, then sud­denly they be­come des­ti­tute.”

BI has banned the use of cryp­tocur­ren­cies by fin­tech com­pa­nies involved in pay­ment sys­tems, but it has yet to reg­u­late in­di­rect trans­ac­tions based on the il­le­gal cur­ren­cies as it was still in a re­view process.

“We have banned the use of vir­tual cur­ren­cies as a pay­ment tool. How­ever, we haven’t reg­u­lated dig­i­tal cur­ren­cies as ob­jects of trans­ac­tions,” BI le­gal de­part­ment head Ros­alia Suci said.

As an ex­am­ple, Ros­alia said, it would be pro­hib­ited for some­one to buy a car with five Bit­coins. How­ever, BI had yet to reg­u­late a trans­ac­tion in which some­one wanted to buy five Bit­coins for Rp 25 mil­lion (US$1,850), then use the ru­piah to purchase some­thing, she said.

Coun­tries have dif­fer­ent stances on Bit­coin, with China and Rus­sia re­ject­ing it, while Ja­pan accepts it as pay­ment.

Bit­coin traded at Rp 233.4 mil­lion ru­piah per unit at 07:40 GMT on Thurs­day at bit­coin.co.id, a lo­cal on­line cryp­tocur­rency ex­change, ac­cord­ing to Reuters.

The new BI reg­u­la­tion re­quires fin­tech com­pa­nies cat­e­go­rized as those un­der pay­ment sys­tem su­per­vi­sion to regis­ter at the cen­tral bank in an ef­fort to bal­ance tech­no­log­i­cal in­no­va­tion and eco­nomic sta­bil­ity in In­done­sia.

Af­ter reg­is­ter­ing, fin­tech star­tups with po­ten­tial “dis­rup­tive in­no­va­tions” will have to take part in a pro­ce­dure called “reg­u­la­tory sand­box” in which they should fol­low a six-month to one-year pro­gram to test their ser­vices un­der the cen­tral bank’s su­per­vi­sion.

BI fin­tech of­fice head Ju­nanto Her­diawan said there was no re­quire­ment of par­tic­i­pa­tion in the reg­u­la­tory sand­box for fin­tech com­pa­nies cat­e­go­rized as hav­ing a tra­di­tional li­cens­ing frame­work.

When reg­u­la­tory sand­box par­tic­i­pants re­ceived the green light from BI they might go ahead with ob­tain­ing a li­cense and ap­proval be­fore they could be au­tho­rized to con­duct their ac­tiv­i­ties in the pub­lic, he said.

He added that BI would con­tin­u­ously mon­i­tor and su­per­vise ac­tiv­i­ties of reg­is­tered fin­tech firms as they were re­quired to sub­mit data and in­for­ma­tion from time to time.

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