The governor of the Indonesian central bank will ban the use of cryptocurrencies as a payment tool. This is another move by this country to stop the growth of the cryptocurrency market.
Indonesia’s central bank governor wants to ban cryptocurrencies
Indonesian Central Bank Governor Perry Warjiyo, announcedthat the institution he manages, Bank Indonesia, will prohibit the use of cryptocurrencies as a payment tool. He announced this at a virtual seminar on June 15. He also said that cryptocurrencies could not be used in the context of “other financial services tools “, although it is not clearly stated which tools are meant.
Governor Warjiyo said cryptocurrency assets are not considered legal tender either by the constitution or by central bank regulations.
The country is currently working on a broad regulatory framework for cryptocurrencies. He added that the cryptocurrency market is conducive to the development of illegal platforms. The country recently shut down 26 peer-to-peer investment firms and lending platforms. The entities were unlicensed. This group included three companies from the cryptocurrency market.
Binance is operating illegally
The head of the task force responsible for the above activities, Tongam Lumban Tobing, also said that Binance is operating in the country illegally because it does not have a license.
This does not bode well for the cryptocurrency market in Indonesia, which is likely to experience even more stringent regulatory action.
Will the government actually ban cryptocurrencies?
However, it does not appear that the government will ban cryptocurrencies entirely. The media adds that officials want to tax cryptocurrency trading. This asset class can be traded as a type of commodity.
The government warns, however, that cryptocurrencies are a highly volatile asset class that is not regulated. Thus, investors were warned against potential large losses.
However, several governments around the world have banned the use of cryptocurrencies as a means of payment. The authorities, however, do not prohibit the possession of such assets. This is happening at a time when central bank digital currencies (CBDCs) are becoming the prime target for governments and central banks to retain their sovereignty over the issuance of legal tender.
El Salvador remains one of the notable exceptions. President Nayib Bukele sent a law to the country’s congress to recognize BTC as the official currency. The new law was passed, but the International Monetary Fund (IMF) considers it problematic from a legal and economic point of view.
Meanwhile, Indonesia is gearing up to develop its own CBDC model. This is to strengthen the digital payments market. The central banks of Canada, China, France, Japan and several other countries are moving in a similar direction. Poland is not currently carrying out such works.
Global financial institutions such as the Bank for International Settlements have also issued warnings about cryptocurrencies, but have advocated a CBDC issue.