Bitcoin is illegal in Indoneisa. Bank Indonesia (BI) is investigating alleged bitcoin transactions made in Bali after it found indication of the activity on social media. It is the first decentralized digital currency, as the system works without a central bank or single administrator. The network is peer-to-peer and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes through the use of cryptography and recorded in a public distributed ledger called a blockchain. Bitcoin was invented by an unknown person or group of people under the name Satoshi Nakamoto and released as open-source software in 2009.
According to results from the investigation, which kicked off late December after BI’s ban, two cafes have been accepting bitcoin as a payment method. BI Bali office head Causa Iman Karana said according to social media content, Bali was a haven for transactions using the cryptocurrency.
Bank Indonesia (BI) has teamed up with the National Police to prevent transactions using cryptocurrency bitcoin in Bali after the central bank declared it an illegal form of payment in Indonesia. It was previously found that 44 businesses, including car rental operations, hotels, travel agencies and jewelry shops, welcomed bitcoin transactions.
Karana said one of the cafes accepted transactions using bitcoin for invoices of more than Rp 243,000 (US$18.25), which is equivalent to 0.001 bitcoins. It took the cafe an hour and a half to process each transaction, while the administration fee was Rp 123,000.
“Our next step is to block them in accordance with the law. We asked them to stop using bitcoins,” said Karana as quoted by kompas.com. “We, together with the National Police’s Special Crimes Directorate, will enforce the regulation that designates rupiah as the only currency for all transactions in Indonesia.”
Bitcoin users in Bali, Indonesia’s most popular tourist destination, are mostly foreigners who stay there over extended periods of time.
Previously, BI claimed bitcoin was a high risk and speculative virtual currency because it was not regulated by a particular legal entity and was without a clear asset base to help determine prices.The bank has banned monetary transactions using bitcoin, owing to the fact that only one currency is valid in Indonesia, namely rupiah. BI spokesman Agusman said the central bank prohibited payment using bitcoin as it violated Law No. 7/2011 on currency.
To specify the ban, BI has also issued BI Regulation No. PBI: 19/12/PBI/2017 on the implementation of financial technology. Under the law, any payment in Indonesia has to be in rupiah.Agusman also warned that transactions with bitcoin had high risk because the cryptocurrency had no official administrator. He also explained that bitcoin was at high risk of being used for money laundering, terrorism and other criminal transactions.