A possible threat to the sustainability of the financial system and the potential risk of losses to the public and the investors were cited as the reasons for the central bank of Indonesia to issue strong warnings against investors trading in cryptocurrencies such as bitcoin.
The Bank Indonesia (BI) had ready said that none of the cryptocurrencies could be used for making payments of any kind in the country because one of the cryptocurrencies were acknowledged to be a legal medium of exchange there.
“The ownership of virtual currencies is high risk and prone to speculation because there is no authority who takes responsibility, there is no official administrator and there is no underlying asset to be the basis for the price,” BI spokesman Agusman said in a statement at the week end.
There could be losses to the society as a whole and potential severe impact on sustainability of the financial system because of the fact that crypto currencies could be put to use for exercise of money laundering and funding of terrorism, he said.
“(Cryptocurrency) is not a legal medium of exchange. We remind (people of) its risks. When the risks occur, the losses will be borne by the public. We are obliged to protect consumers and protect them from a bubble,” Agusman said.
“They didn’t consult with us when buying….please help us make the people understand,” he said which answering a question about whether there could be panic among the people who had already made some investments in the cryptocurrencies from the statements.
Indonesian authorities have said that they are considering the need for issuing regulations to control the trading on crypto currencies and they have been constantly enhancing their warnings. The use of virtual currencies as a medium of making payments by financial technology companies was banned in the country through a regulation issued last month by the Bank Indonesia.
Last week, South Korean justice minister, Park Sang-ki, said that preparations to stop trading of cryptocurrencies in the country were being made by regulators and this announcement caused a huge drop in the value of bitcoin globally in addition to creating a huge turmoil in the global cryptocurrency market.
For bitcoin, there were some later gains on the Luxembourg-based Bitstamp with a value of $14,116 in the latest round of trading following a hitting a value of $12,800 last week. Bitcoin was trading at 217.44 million rupiah ($16,288) per unit said bitcoin.co.id, an Indonesian online cryptocurrency exchange, on its website.
However, acceptance of bitcoin as modes of payment are still being displayed in some Indonesia based websites and merchants such as an online babyware supplier.
(Adapted from CNBC.com)