Bank Indonesia is taking a firm stance against cryptocurrencies as it urges all parties to refrain from owning, selling or trading the tokens.
“Owning virtual currencies is very risky and inherently speculative,” the central bank said in a statement yesterday.
The digital tokens “are prone to forming asset bubbles and tend to be used as a method for money laundering and terrorism funding, so it has the potential to affect financial-system stability and harm the public,” it added.
The move highlights the challenge faced by regulators as they seek to manage potential risks from the global cryptocurrency mania, while lacking the authority to prohibit its use.
South Korea’s central bank last week banned employees from trading cryptocurrencies on the job, while China has outlined proposals to discourage bitcoin mining, the process by which the virtual currency enters circulation.
Bank Indonesia’s statement follows its earlier ban this month on financial technology companies using cryptocurrencies for transactions, which does not prohibit trading of the digital tokens itself.
While the authority reiterates an existing ban on payment-system providers under its watch from processing transactions using digital currencies, PT Bitcoin Indonesia, a virtual-currency exchange that has more than 940,000 members, does not fall under its supervision.
Separately, US Secretary of the Treasury Steven Mnuchin said he would work with the G20 to prevent cryptocurrencies from becoming the digital equivalent of an anonymous Swiss bank account.
Speaking on Friday to the Economic Club of Washington, he said he wants to ensure that “bad people cannot use these currencies to do bad things.”
“[Under US law] if you have a wallet to own bitcoins, that company has the same obligation as a bank to know” you as a customer, Mnuchin said. “We can track those activities. The rest of the world doesn’t have that, so one of the things we will be working very closely with the G20 is making sure that this doesn’t become the Swiss bank account.”
Mnuchin said that US authorities, including the Federal Reserve, are studying the pros and cons of issuing digital dollars instead of hard cash, but “the Fed and we don’t think there’s any need for that at this point.”
Mnuchin also said that he is “not at all” worried that Russia might use cryptocurrencies to help its banks avoid international sanctions.
An adviser to Russian President Vladimir Putin is reported to have said that sanctions against Russia have created a need for digital currencies.
“This idea that Russia or Venezuela can thwart the pressure from sanctions just by developing their own cryptocurrency is silly,” said lawyer Erich Ferrari of Ferrari & Associates in Washington. “It’s like trying to do it by using cash. Yes, you can do it more easily with cash, but it doesn’t mean you’re evading. It’s harder to get caught.”
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