The existence of bitcoin in Indonesia, although promising, is likely to decrease following the express refusal declared by BI.
On 13 January 2018, BI expressly states its rejection toward the virtual currency by issuing a press release stating virtual currencies (“BI Press Release”), including bitcoin are not recognized as valid payment means, and therefore prohibited to be used as payment means in Indonesia. This is in accordance with Law No. 7 of 2011 concerning Currency Law stating that the currency is money issued in Republic of Indonesia and all transactions with payment purpose, or other obligations fulfilled by money conducted in Indonesian territory need to use Rupiah.
This statement is in line with stipulation under PBI No. 18/2016 and BI Regulations on Fintech that all payment system service provider (being principal, switching operator, clearing operator, final settlement operator, acquirer, payment gateway, e-wallet operator, fund transfer operator) and financial technology operator in Indonesia, either in the form of bank or non-bank, is prohibited to process their transactions using virtual currency.
Following the issuance of the BI Press Release, it is worth to note there are alterations made by some fintech companies which usually conduct bitcoin business, such as the rebranding of Bitcoin Indonesia into Indodax, claiming itself as a market place digital assets trading instead of bitcoin trading.
As per issuance of the BI Press Release, the numbers of users of bitcoin decreased dramatically to only 100,000 users and its price was weakened as well. Generally the number of users of Bitcoin is lesser if we compare to (i) the number of Indonesian citizens, being more than 250 million people and (ii) velocity of money in China which reaches until IDR 50 billion. The biggest sector in Indonesia that use bitcoin is tourism sector and small and medium enterprises as the part of creative industry.