Indonesia's central bank issued a warning against cryptocurrencies on Saturday, saying they were highly risky, and joining its counterparts in other countries in raising concern over the excessive price surge in the unregulated digital currency market.
"Virtual currencies, including bitcoin, are not recognized as legitimate instrument of payment, therefore not allowed to be used for payment in Indonesia," the Bank Indonesia said in a statement.
The central bank said that the "ownership of virtual currency is highly risky and loaded with speculations, considering there is no authority responsible, no official administrator, no underlying assets to base the virtual currency price, and that the trade value is highly volatile."
Hence, virtual currencies are vulnerable to bubble risks, and susceptible to be used for criminal activities such as money laundering and terrorism financing, thus having a potential impact on the financial system stability and cause financial harm to society, the bank concluded.
"All things considered, Bank Indonesia warns all parties not to sell, buy, or trade virtual currency," the bank said.
The central bank also forbid all payment system operators and financial technology operators in Indonesia, both bank and nonbank institutions, from processing transactions using virtual currency.
Cryptocurrencies have seen monumental growth in value over the past couple of months. Central banks and governments across the world have issued warnings against trading in cryptocurrencies.
China and South Korea, which are two main markets for digital currencies, have led the crackdown attempts. The former initiated measures in September 2017, while the latter intensified efforts last week.
India's central bank has also issued repeated warnings against transacting in cryptocurrencies.
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