The top regulatory body in Indonesia has told financial firms in the country to stay clear of facilitating all transactions that involve cryptocurrency. Indonesia’s watchdog cited concerns regarding market volatility and investor protection.
Financial Service Providers Not Allowed To Touch Crypto
According to a report from Reuters, the Financial Services Authority of Indonesia, Otoritas Jasa Keuangan (OJK), has issued a ban restricting all financial service providers in the country from processing crypto transactions and the sale of digital assets. The regulatory agency announced the news via an Instagram post published.
An excerpt from the statement reads:
“OJK has strictly prohibited financial service institutions from using, marketing, and/or facilitating crypto asset trading…”
OJK reportedly recognizes the growth of the crypto industry in Southeast Asia’s largest economy. Data from the Trade Ministry shows that transaction volumes involving virtual assets surged to $59.83 billion (859 trillion Rupiah) in 2021 alone. In 2020, trading volume stood at $4.18 billion (60 trillion Rupiah).
Indonesia’s top financial watchdog has, however, expressed reservations regarding market volatility and a need to manage the risks associated with digital assets to protect investors. OJK also warned citizens to be wary of Ponzi schemes and crypto scams when making their investments.
Despite the recent announcement, trading crypto asset trading in Indonesia remains authorized by law. However, cryptocurrencies are not recognized as a valid means of payment and can solely be purchased as an investment vehicle, according to regulatory policies published by the Ministry of Trade in 2018 and 2019.
Investors in Indonesia are
permitted to trade blockchain-powered virtual currencies on a commodities exchange overseen by the Commodity Futures Trading Regulatory Agency and the Trade Ministry.
Also, the ministry is reportedly developing a Digital Futures Exchange to provide better regulatory oversight and offer a more tailored trading platform for investors. The exchange is expected to launch before the first quarter of 2022 is over.
Restrictive Crypto Policies Across Southeast Asia
Similar to Indonesia’s decision to stop financial institutions from facilitating crypto transactions, the central bank of Thailand, its Ministry of Finance, and the country’s Securities and Exchange Commission (SEC) have jointly issued a ban on accepting cryptocurrencies as a means of payment for goods and services.
Regulators in Singapore also recently announced policies limiting digital asset service providers from promoting their facilities to the general public.