Bali cracks down on cryptocurrency payments by tourists

Picture for illustration purpose only.

29th May 2023 – (Bali) Bali’s government has launched a crackdown on tourists using cryptocurrency to pay for goods and services, reminding them that Indonesia’s fiat currency is the only legal tender. On May 28, Bali Governor Wayan Koster hosted a press conference, during which he warned tourists that they “will be dealt with firmly” if they use cryptocurrency as a means of payment. “Strict actions range from deportation, administrative sanctionscriminal penalties, closure of business premises, and other tough sanctions,” he said.

The meeting was attended by Bali’s chief police inspector and Trisno Nugroho, the head of the Bali Representative Office for Bank Indonesia — the country’s central bank. Nugroho reaffirmed that trading crypto is allowed, but the use of crypto for payments is banned.

Koster noted that Indonesia’s currency, the rupiah, is the only one that can be legally used for payments in the country. The use of other currencies carries a maximum potential sentence of one year in prison and a fine of 200 million rupiah ($13,000).

Despite the hardline stance from Bali’s governor and Indonesia, the country is on the path to rolling out a national crypto exchange by next month. The Ministry of Trade will reportedly act as a custodian and clearing house for the local cryptocurrency markets. The platform was originally meant to be operational by the end of 2022, but suffered delays.

According to data from Coinmap, a community-driven project that aims to map crypto-accepting businesses, there are 36 businesses in Bali that accept crypto, mostly concentrated in Ubud — a tourist hotspot town. Kompas reportedly found multiple Bali-based businesses that accepted cryptocurrency payments, including a meditation retreat, a motorbike rental business, and a crypto-themed cafe.

While the crackdown on cryptocurrency payments in Bali may seem harsh, it is reflective of a wider trend in Southeast Asia. Governments in the region have been stepping up their efforts to regulate the use of cryptocurrencies. Malaysia, for example, has made it mandatory for cryptocurrency exchanges to register with the Securities Commission. Thailand has introduced a licensing regime for cryptocurrency-related businesses, while the Philippines has issued permits to a number of cryptocurrency exchanges.

The move towards greater regulation of cryptocurrencies is partly motivated by concerns about money laundering and terrorist financing. Cryptocurrencies are often associated with illicit activities due to their anonymity and lack of transparency. Governments in the region are also keen to protect their national currencies and maintain control over their monetary systems.

Despite the regulatory challenges, the use of cryptocurrencies in Southeast Asia is growing. According to a report by Luno, a cryptocurrency exchange, the number of people using cryptocurrencies in the region has grown significantly in recent years. The report found that Indonesia had the second-highest percentage of cryptocurrency users in the world, after Nigeria. The Philippines and Thailand also ranked highly in terms of cryptocurrency adoption.