The “split decision” between Indonesia’s central bank and its futures authority regarding cryptocurrencies reveals a challenge that a number of nations will face: how to embrace cryptocurrency without the support of the banks.
The Indonesian Futures Exchange Supervisory Board – known locally as Bappebti – has reportedly moved to permit the trading of cryptocurrencies as a commodity on the nation’s futures exchanges. This decree comes despite a mandate issued last year by Bank Indonesia (BI), Indonesia’s central bank, which threatened a crackdown on anyone caught using cryptocurrency as a payment method.
In October 2017, BI Governor Agus Martowardojo said, “We are affirming that [cryptocurrency] is not a means of payment; if used, [there will be consequences]. I do not want any violations in Indonesia now that BI has confirmed that bitcoin is not a valid payment instrument.”
This position, however, has not dampened enthusiasm for cryptocurrency in Indonesia. For example, Indonesia Digital Asset Exchange (INDODAX), one of Indonesia’s largest cryptocurrency exchanges, has more registered users than the Indonesian Stock Exchange.
Bappebti’s decree will form a cornerstone of an evolving framework of regulations that will encompass taxation, new business registration, terrorist financing and money laundering prevention, and the supervision of exchanges, wallet providers, and mining companies. Bappebti has stated it will seek the input from BI, as well as the Indonesian Financial Services Authority in the creation of the new rules.
In an era when banks are withdrawing from cryptocurrency support in recognition of the inherent risks of a highly volatile commodity, and in which governments are giving in to the potential of distributed ledger technology, this inconsistency presents a problem for the growth and mass acceptance of cryptocurrency.
“If you consider mass-market acceptance and usage of cryptocurrency as the ultimate end goal, then acceptance by banks is very important,” Jeff Koyen, president of 360 Blockchain USA, told ETHNews.
“Not everyone in crypto wants this mainstream acceptance, however,” Koyen continued.
Cryptocurrency started as a rejection of banking authority and has come to be thought of by some as a “shadow economy” that operates despite the banks. Bank support, according to Koyen, will cause this economy to bifurcate onto fiduciary-friendly and renegade sides, which may sacrifice growth in exchange for increased bank profits.
“Such a split decision, whether in Indonesia or elsewhere, creates uncertainty for developers and large institutional investors, especially in an industry that is so young and in need of both,” added Henry Stanley, founder of ICO Axiom.
Conflicting resolutions such as these reflect the balancing act that nations must undergo between embracing a new technology and protecting their economic base. As more nations define their regulatory frameworks, mixed signals from separate institutions may become more common than universal agreement.
“It is important to note that while governments may consider various cryptocurrencies assets, they have not yet granted these assets equal transaction fungibility with fiat currency,” Eric Kovalak, CEO of Vellum Capital, told ETHNews. “Until this happens, every time a crypto is bought or sold, governments may be understanding this as a taxable event.”
“I think the split decision tells us that governments want to participate in the crypto or blockchain-driven economy, but they are not yet ready to allow this to disrupt existing monetary systems,” Kovalak said.
Some translations approximated using Google Translate.
Frederick Reese is a politics and cryptocurrency reporter based in New York. He is also a former teacher, an early adopter of bitcoin and Litecoin, and an enthusiast of all things geeky and nerdy.
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