Bitcoin Use In Bali Being Investigated By Bank Indonesia

News, Regulation | January 19, 2018 By:

Bank Indonesia, the country’s central bank, has teamed with the national police force to tackle the illegal use of bitcoin in Bali.

Bali is known for its forested volcanic mountains, iconic rice paddies, beaches and coral reefs. The island is home to religious sites such as cliffside Uluwatu Temple. It is also a popular holiday destination with tourists spending both cash and cryptocurrencies.

Bank Indonesia Bali office head Causa Iman Karana said they are investigating the use of bitcoin in the island. The investigation started after the central bank issued a regulation banning the use of bitcoin and other cryptocurrencies in the country last month.

“We found out from some postings on social media that Bali appeared to have become a haven for bitcoin transactions,” said Karana.

According to Karana, central bank officials and police went undercover at the end of 2017 to investigate scores of businesses in Bali advertising online that they offered bitcoin payment services. Karana said they found two cafes still using bitcoin as a means of payment. But 44 businesses including car rental outlets, hotels, travel companies and jewelry stores, previously offering the service, had now stopped.

Karana stated that one of the cafes used bitcoin only for transactions of more than 243,000 rupiah, or about 0.001 bitcoin. A single transaction took about 1 1/2 hours to be processed and included a fee of 123,000 rupiah so this had discouraged its wider use for payments.

“The next step is we will ban them, as mandated by the laws,” said Karana. “We ask them not to use it anymore. Along with the Directorate of Special Crime Investigation unit, we will enforce the rule that all transactions in Indonesia must use rupiah.”

Last month, Bank Indonesia issued a warning against selling, buying or trading cryptocurrencies such as bitcoin. The central bank said cryptocurrencies are not legal tender in the country and cannot be used in transactions.

Bank Indonesia spokesman Agusman said that the ownership of cryptocurrencies 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 as the basis for the price.