Bank Indonesia announced on Thursday it has issued new regulations that bar fintech companies from using cryptocurrencies on their platforms. This news comes less than two months after the bank announced it has drawn up rules to monitor fintechs in the country.
“Financial Technology [Fintech] Providers that have been registered with Bank Indonesia must fulfill the following principal points: applying consumer protection principles, maintaining the confidentiality of data and/or consumer information including transactional data and/or information, and applying risk and prudential risk management principles. Another thing is the obligation to use rupiah in every transaction conducted in NKRI region, apply anti money laundering and terrorism financing prevention principles, and comply with other laws and regulations. Included also in it, the Financial Technology Provider is prohibited to conduct payment system activities using Virtual Currency.”
Bank Indonesia Deputy Governor Sugeng reportedly stated that barring of cryptocurrencies is part of the fintech rules, which mandates digital payment system providers to apply for central bank licenses. Iwan Junato Herdiawan, Head of Fintech at Bank Indonesia, stated:
“Virtual currency is very volatile, according to our observations, and nobody can guarantee its movement because there is no basis for it.Nobody can monitor and be responsible for it either. So the risks are high and can be widespread.”
“Bitcoin use, which is not regulated, may pose a risk and the bank may have to inject liquidity. That will affect the market and stability.”
Bank Indonesia also noted it will establish the products, services, technology, and/or business models of the registered Financial Technology Provider, to be tested in the Regulatory Sandbox, which is described as a space to conduct limited trials on the Financial Institution Provider’s products, services, technology and/or business models.
“In the Regulatory Sandbox, the Financial Technology Provider and Bank Indonesia jointly conduct monitoring and evaluation of innovations from products, services, technology, and / or business models of financial technology. It is expected to make room for the Financial Technology Provider to ensure further whether its products, services, technology, and / or business model meet various applicable criteria and regulations.”
The rules are set to go into effect on January 1, 2018.