Indonesian central bank to bar fintech firms from using cryptocurrencies

Bank Indonesia, the country’s central bank, has decided to ban use of cryptocurrencies by fintech firms engaged in processing payments.

Indonesian central bank to bar fintech firms from using cryptocurrencies

The central bank said that virtual currencies could pose a big risk for the economy and raised concerns on their use in terrorism financing and money laundering.

The move, which does not affect trading of digital currencies, will come into effect from 2018.

Bank Indonesia head of fintech Sugeng said: “Virtual currency is very volatile, according to our observations, and nobody can guarantee its movement because there is no basis for it. Nobody can monitor and be responsible for it either. So the risks are high and can be widespread.”

Bank Indonesia assistant governor Dody Budi Waluyo added: “Bitcoin use, which is not regulated, may pose a risk and the bank may have to inject liquidity. That will affect the market and stability.”

Recently, various regulators have denounced cryptocurrencies and initial coin offerings (ICOs), which is a means to raise funds for cryptocurrency projects. ICOs have already been banned in China and South Korea, while several regulators including Securities and Futures Commission (SFC) of Hong Kong, UK’s Financial Conduct Authority, and US Securities and Exchange Commission have issued warnings on ICOs.

Earlier this year, JPMorgan CEO Jamie Dimon called bitcoin a ‘fraud’.