Indonesia’s Financial Regulator: Local Firms Are Not Allowed to Offer Crypto Services (Report)

Original author: Dimitar Dzhondzhorov

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The top monetary watchdog of Indonesia – the Financial Services Authority (OJK) – reportedly prohibited local companies from using, offering, or facilitating cryptocurrency services. The regulator believes dealing with bitcoin and the altcoins is risky due to their enhanced price fluctuations.

Crypto Is Under Crossfire in Indonesia

The authorities of the Asian country have displayed a hostile stance towards the cryptocurrency industry over the past several months. In November 2021, the National Ulema Council (MUI) opined that digital assets are riddled with “uncertainty, wagering, and harm.” As such, the organization urged that such investments should be declared “haram” – a term in the Islamic religion that means “forbidden.”

Last week, another organization – Tarjih Muhammadiyah – outcasted crypto as unlawful for Muslims. The entity argued that bitcoin and the alternative coins are speculative and not backed by other assets such as gold.

According to a recent report by Reuters, the Financial Services Authority (OJK) is the next in line to criticize the asset class:

“OJK has strictly prohibited financial service institutions from using, marketing, and/or facilitating crypto asset trading.”

Apart from mentioning the usual argument with crypto’s notorious volatility, the country’s regulator pointed out that Ponzi scheme scams could thrive in the industry. As such, investors should be aware of all the risks surrounding the ecosystem before entering it.

Despite its negative viewpoint on the world of crypto, the Indonesian government allows sales of bitcoin and altcoins on exchanges. The Commodity Futures Trading Regulatory Agency supervises the operations. Nonetheless, locals cannot employ digital assets for payments inside the nation’s borders.

Different Opinion on CBDC

While the Indonesian authorities do not favor private cryptocurrencies, this is not the case with a CBDC. In May last year, Perry Warjiyo – Governor of Bank Indonesia – asserted that the financial institution is on its way to launching a digital version of its national currency.

The exec disclosed that during the COVID-19 pandemic, locals have switched from cash to digital payments arguing that a fully controlled central bank digital currency could be the best option for the money transition.

Several months later, Indonesia’s central bank said releasing a CBDC could also “fight” bitcoin and the alternative coins. According to the authorities, they cause a negative impact on the nation’s monetary system:

“A CBDC would be one of the tools to fight crypto. We assume that people would find CBDC more credible than crypto. CBDC would be part of an effort to address the use of crypto in financial transactions.”