FACULTY OF LAW

PADJADJARAN UNIVERSITY

Theme
Legal Aspects of Financial Technology in Indonesia

Title
Use of Bitcoin as a Legitimate Payment Tool in Indonesia:
Terminable Time Bomb

By:
William Edward Sibarani
Roy Rinaldo Lumbantoruan
Batch of 2015
hi.williamedwr@gmail.com
 Abstract
Bitcoin as one of the digital transaction media has brought influence in the dynamics of the
livelihood of the world community, especially in Indonesia. Its ever-increasing value presents
hope for Bitcoin miners (miners) to cultivate coffers of profit. However, the existence of
Bitcoin as a legal payment instrument in Indonesia is still questionable. This interests the author
to further analyze the phenomenon of technological developments in the financial sector which
until now has not been given protection from the state through the formation of legislation.
Citing Prof. Romli Atmasasmita's view, the preparation of legal politics is necessary for all
sectors of the National Development Plan. This includes a plan to equalize the position of
Bitcoin as a legal payment instrument in Indonesia, the same as in Rupiah.
Keywords: Bitcoin, technology, protection, payment, regulations, legal politics.

Use of Bitcoin as a Legitimate Payment Tool in Indonesia:

Terminable Time Bomb

Background
Today, the world community cannot be separated from the swift development of
technology. Who doesn't respond quickly to adapt to the times, will be left behind and
forgotten.1 Similarly, in trading activities that are now dominated in the world of cyber
(cyberspace) or commonly known as e-commerce. The ease and practicality of trading using
e-commerce attract consumers, especially in Indonesia. In addition to being able to conduct
borderless transactions, the use of electronic media in trade is also a borderless way of
thinking.2
The development of this digital transaction model is supported by easy access to the
internet, especially for transactions such as buying and selling, renting, borrowing, funding,
investing and so forth. 3This proves that information disclosed to the general public facilitates
activities in various fields, especially trade.
Trafficking is no longer carried out between individuals and individuals in one country,
but it can be done between individuals with other individuals in different countries. Jacques

1
Man Suparman Sastrawidjaja, Perjanjian Baku dalam Aktivitas Dunia Maya, Cyber Law: Suatu Pengantar,
Jakarta: Ellips, 2002, page 14.
2
Steven Harnad, Post Gutenberg Galaxy: The Fourth Revolutions in the Means of Production of Knowledge,
Public Access Computer Review 2, page 36.
3
Dimitri Mahayana, Menjemput Masa Depan, Futuristik dan Rekayasa Masyarakat Menuju Era Global,
Bandung: Rosida, 2000, page 24-25.

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Gelinas categorizes this era into the era of modern capitalism where every country struggles
to adapt to international relations as an independent state by opening itself to the widest
possible changes. 4Trade that now no longer brings buyers and sellers together directly opens
a wide door to new, unusual payment methods such as transfers through ATMs, automatic
payments using Credit Cards or other virtual payment methods.
Bitcoin is one of the many virtual payment instruments that is currently being hotly
discussed throughout the world. Bitcoin is one manifestation of the influence of technology in
the financial sector which is a digital currency. Digital currency or digital currency is a currency
that has a digital form and can be used to transact with goods in the real world. This type of
currency began to appear from 1996 until now. 5Until now, the price of 1 Bitcoin is equivalent
to Rp215,099,000.00 (two hundred fifteen million ninety-nine thousand rupiahs). 6
The price of Bitcoin, which continues to soar to over 200 million, is caused by several
things, one of which is that investor confidence has increased dramatically due to a large
number of countries that legalize digital currencies as legal tender. 7Singapore is one of the
countries that legalize Bitcoin by applying taxes to both users and business managers of
Bitcoin. The Singapore government's actions in demonstrating political sovereignty over the
stability of the country's economy benefit both parties by not compromising the value of their
currency's decline.
In Indonesia, the payment system service providers have been banned from using Bitcoin
as a means of payment. This is stated in Article 34 letter a of Bank Indonesia Regulation
Number 18 the Year 2016 concerning the Implementation of Payment Transaction
Processing which states clearly that the payment system service provider is prohibited from
processing payment transactions using virtual currency. 8That is, banks or institutions other
than banks that carry out payment transaction processing functions are not allowed to use the
virtual currency to complete transactions.
Virtual currency referred to by Bank Indonesia is digital money issued by parties other
than monetary authorities obtained by mining, purchasing, or transfer of rewards, including

4
Jacques Gelinas, Juggernaut Politics: Understanding Predatory Globalization, 2003, halaman 4-9.
5 Damiann Muhammad Mangan, Bitcoin: Cara Kerja dan Perbandingannya dengan Mata Uang Konvensional,
Bandung: Institut Teknologi Bandung, 2012, page 1.
6 http://Bitcoin.co.id diakses pada 12 Januari 2018 pukul 23.30 WIB.
7 7
Felix Lukman, Mengapa Harga Bitcoin Terus Naik?,
https://www.kompasiana.com/cryptoholix/5a1d73eafcf68159b5366922/mengapa-harga-Bitcoin-terus-naik
accessed on January 12th, 2018..

8Pasal 34 huruf a Peraturan Bank Indonesia Nomor 18 Tahun 2016 tentang Penyelenggaraan Pemrosesan
Transaksi Pembayaran.

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Bitcoin, BlackCoin, Dash, Dogecoin, Litecoin, Namecoin, Nxt, Peercoin, Primecoin, Ripple
and Ven. 9Therefore, it is necessary to analyze this problem considering that if the use of
Bitcoin is not immediately controlled through an instrument of legislation by the state, it is
feared there will be economic instability in Indonesia.

Problem Identifications
1. What is the impact of the practice of using Bitcoin as a payment instrument in Indonesia?
2. What is the role of the government in minimizing the practice of using Bitcoin as a
medium for transactions and investments in Indonesia?

Rupiah as a payment tool in Indonesia

It's hard to argue that a country's economy is controlled by that country's currency. The
higher the exchange rate of a country's money, the higher the level of welfare of its people.
Because the exchange rate determines the rate of development of a country, a legal instrument
is needed so that economic stability can be achieved. Indonesia as a state of law 10places Bank
Indonesia as an independent body aimed at supporting the realization of the national economy
following the increasingly complex development and development of the world economy.
Bank Indonesia as the central bank functions to maintain and maintain the stability of the rupiah
11The
from an increasingly competitive and integrated international economy. stability of the
rupiah value in question is the stability of the exchange rate of the rupiah against the price of
goods / services and other countries' currencies. When Bank Indonesia fails to maintain the
stability of the rupiah exchange rate, it can cause the price of goods / services on the market to
surge up and lead to a decline in real income of the people, making the competitiveness of the
Indonesian economy on the world stage weaken. Then in addition to managing banking funds,
Bank Indonesia also regulates and oversees banking activities as a whole. 12
This enormous authority is certainly intended so that Indonesia, as a country that relies
heavily on economic activities, is not easily swayed by various changes that occur in the world.
In addition, only Bank Indonesia has the authority to issue and circulate rupiah currency and
revoke, withdraw, and destroy rupiah from circulation. 13In a country where the role of money

9 Penjelasan Pasal 34 huruf a Peraturan Bank Indonesia Nomor 18 Tahun 2016 tentang Penyelenggaraan
Pemrosesan Transaksi Pembayaran.
10 Act 1 Number 3 of UUD 1945 3rd amandement.
11 Act 7 of Law Number 23 of 1999 about Bank Indonesia.
12 Jamal Wiwoho, Hukum Perbankan Indonesia. Surakarta: Sebelas Maret University Press, 2011, page 10.
13 Act 20 Law Number 23 of 1999 about Bank Indonesia.

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is not well protected, justice and prosperity of the people will be more difficult to achieve
because of the loss of the function of money as a means of payment. This is indicated by placing
the rupiah as the only prevailing currency in Indonesia. Therefore, the one-way control and
supervision function that is fully held by Bank Indonesia to save the rupiah exchange rate both
inside and on the international market is Indonesia's political action as a consequence of being
a law state.14

The impact of using Bitcoin in Indonesia

Indonesia as an independent country has established a currency that is a symbol of
national sovereignty, which must be respected and proud of by all the people of Indonesia. This
has been clearly stated in Article 2 paragraph (1) of Law Number 7 of 2011 concerning
Currency which states the rupiah as the only applicable currency in Indonesia. 15The two laws
and regulations above have stated clearly that there are no other currencies that apply in
Indonesia other than the rupiah. In Indonesia, although there are regulations that prohibit the
use of virtual currencies such as Bitcoin by Bank Indonesia, there are still companies that
continue to carry out buying and selling Bitcoin, namely PT Bit Coin Indonesia. 16

Like a time bomb, if it is not controlled as fast as possible then the explosion will
spread everywhere.

This analogy can also be used in the context of the practice of using Bitcoin in Indonesia.
Until now there is no legal instrument that regulates the legality of Bitcoin as a means of
payment in Indonesia, so the practice of its use must be highly considered. The main reason
why Bitcoin will be a time bomb against the Indonesian rupiah is that there is no role of the
central bank that oversees.17 The form that cannot be seen physically and is not issued by the
authorized financial institution makes Bitcoin not considered a currency either in Indonesia or
in many other countries. 18

14 Arief Sidharta, Kajian Kefilsafatan tentang Negara Hukum, Jurnal Lentera, 2004, page 124.
15 Act 2 Law Number 7 of 2011 about Currency
16 https://www.Bitcoin.co.id accessed on January 16th 2018.
17 Jan Moller argumentation’s on International Software Development Conference 2014, Copenhagen, Denmark

2014.
18 Robby Houben, The CJEU’s View of Whether Bitcoins are a Currency: a Belgian Perspective, United

Kingdom: Thomson Reuters, 2016, page 3.

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 Bank Indonesia itself regulates the implementation of financial technology by applying
the principles of consumer protection and risk management and prudence. 19 However, because
Bank Indonesia has issued a ban related to the use of digital currencies such as Bitcoin, it can
be seen that Bank Indonesia cannot guarantee the security of every transaction using Bitcoin.
This is because Bank Indonesia does not have the authority to oversee Bitcoin transaction
flows.
In the absence of the role of Bank Indonesia in monitoring the flow of Bitcoin
transactions in Indonesia this has the potential to lead to criminal acts, especially money
laundering. What's more, Bitcoin provides flexibility for its users to take cover in anonymity
when making a transaction that is staying digadang aims to streamline the buying and selling
activities.20
This anonymity feature can be misused to carry out trading activities to cover up criminal
acts, especially money laundering. Criminal money can be "washed" in the form of Bitcoin and
not tracked by the financial system. Likewise money from proceeds of human trafficking,
21Even
funding of acts of terrorism, purchase of prohibited goods and so forth. the use of
Bitcoin can be done by many businesses to avoid the imposition of tax costs. Considering that
as of October 2017, there were approximately 520 thousand active members who were buying
and selling Bitcoin transactions without reporting to the Director-General of Taxes. 22
As one of the developing countries in the world, the presence of Bitcoin becomes a bomb
that is ready to explode anytime. 23Therefore, the government must not wait until the examples
of crime above become reality. The government must prepare strong legal instruments to take
action against various forms of crime arising from the presence of Bitcoin in Indonesia. Not
only damaging the economy, but the crimes that arise can actually make the country even
controlled by Bitcoin.
Some of the examples above are clearly very detrimental to Indonesia from the tax
revenue sector and must be followed up immediately by the government. One of the
enforcement efforts that the government can do to save the rupiah exchange rate is by making

19 Act 2 of Bank Indonesia’s Law Number 19 of 2017 about Financial Technology Practice
20 Damiann Muhammad Mangan, Op.cit., page 3.
21 United Nations Office on Drugsand Crime (UNDOC), Basic Manual on The Detection and Investigation of The

Laundering of Crime Proceeds Using Virtual Currencies, Juni 2014, page 50.
22 Edmalia Rohmani, Menangkap Momentum Popularitas Bitcoin, http://

http://www.pajak.go.id/content/article/menangkap-momentum-popularitas-Bitcoin diakses pada hari Minggu,

14 Januari 2018 pukul 16:29 WIB.
23 Sally Ramage, Bit Coins – Kiss of Death to Us All in The Developed World, United Kingdom: Thomson

Reuters, 2014, page 1.

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laws and regulations specifically discussing virtual currencies such as Bitcoin. This problem is
so important considering the rapid development of Bitcoin is not comparable to legal
instruments that still have gaps.

Actions that can be taken by the government

European Banking Authority (EBA) as a banking supervisory institution that oversees
the European continent states that there are two risks if the use of Bitcoin is left unattended.
24"Digital Wallet" owned by every Bitcoin user is very vulnerable to be hacked or infiltrated
by a virus. This is caused by the absence of integrated security 25 features because Bitcoin
users are spread all over the world. When a hack occurs which results in the loss of part or all
of the user's money, no party can be held accountable. If the government does not immediately
make arrangements regarding virtual currencies, especially in the field of consumer protection,
then the rights of users as consumers will be violated and abandoned because there is no legal
protection from the government through legislation.
The second risk that arises is the vulnerability of Bitcoin business managers exposed to
hacker attacks and bankruptcy due to unpredictable Bitcoin exchange rate fluctuations. Stephen
Roach believes that the volatility of the rate is so unstable it is very dangerous for users who
26Especially
want to make Bitcoin investments. if there are no legal instruments that oversee
the operation of Bitcoin transactions between business managers and users. At least one
security standard that is held by government agencies is needed so that every Bitcoin
transaction involving Indonesian citizens as users can be monitored properly.
In addition to regulating virtual currencies in the field of consumer protection, it also
requires arrangements regarding restrictions on the circulation of Bitcoin on the trading market.
Onny Widjanarko as the Head of the Transformation Center of Bank Indonesia explained that
the absence of a central authority that can control Bitcoin is feared to cause a price bubble
which is dangerous for financial system stability due to unlimited money printing. 27When the
amount of money printed is too high, the impact of this exchange rate will fall.

24 https://finance.detik.com/moneter/2441603/hati-hati-bitcoin-sangat-berbahaya diakses pada 17 Januari 2018

pukul 01.11 WIB.
25 Mark Kalderon, Distributed Ledgers: A Future in Financial Services?, United Kingdom: Thomson Reuters,

2016, page 5.
26 https://finance.detik.com/moneter/2441603/hati-hati-bitcoin-sangat-berbahaya. diakses pada tanggal 17 Januari

2018 pukul 01.12 WIB

27https://koran.tempo.co/konten/2018/01/16/426301/Bitcoin-Berpotensi-Mengganggu-Stabilitas-Sistem-

Keuangan diakses pada tanggal 17 Januari 2018 pukul 02.00 WIB.

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 Also, the government can force business managers of Bitcoin or other virtual currencies
that have not been recognized to be subject to supervision under Bank Indonesia and the
Financial Services Authority as a central supervisory body. This is also done by Japan to
maintain transaction transparency starting from bookkeeping, transaction processing, and
standardized transaction reporting processes. Business managers must also be willing to report
customer financial data regularly to monitor suspicious money flows that can lead to money
laundering.28 If the business manager does not want to comply with government regulations,
the government has the right to impose sanctions on business managers.
The form of legalizing Bitcoin also does not merely limit the amount of circulation. The
Indonesian government can follow other countries such as Singapore and Brazil which impose
taxes on every Bitcoin transaction that occurs in their country. A very fast Bitcoin transaction
flow can be used as a source of state income, especially the Bitcoin exchange rate continues to
rise from time to time. In the country of Brazil, applying income tax payments to every Bitcoin
transaction without having to make a new law. 29This is possible because the virtual currency
is considered the same as assets or goods that can be taxed in general, not considered a form
of secondary currency.

Conclusion
The position of Bitcoin as a payment instrument in Indonesia is still not legal until now.
Many factors are behind the government's reasons for not legalizing Bitcoin through
legislation. The absence of the role of Bank Indonesia as the central authority in terms of
supervision and control of digital currencies has caused the vulnerability of Bitcoin transactions
in Indonesia. As a result, many risks arise due to the absence of the role of Bank Indonesia in
overseeing Bitcoin transactions. Starting from the potential for criminal acts that arise, the
rights of consumers who have been harmed, the liability is not yet clear and the decline in the
rupiah exchange rate due to the shift in people's interest to make payments and investments
using Bitcoin.
This problem must be answered immediately by the government through the
establishment of legislation as a consequence of the rule of law. Starting about protecting
consumer rights in Bitcoin transactions, restrictions on printing Bitcoin currencies, to the

28 Yanaga Masao, Virtual Currencies – Regulation and Challenges in Japan, United Kingdom: Thomson Reuters,
2017, page 6.
29 Walter Stuber, Brazil: Virtual Currencies – Tax, Brazil: Journal of International Banking Law and

Regulation, 2014, halaman 1.

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imposition of taxes on every Bitcoin transaction in Indonesia can be done by the government.
These choices can be used as an alternative by the government to resolve the polemic about
Bitcoin that is happening right now.

Suggestion
Through this analysis, the authors provide some suggestions so that the problem of this
Bitcoin practice can be slightly resolved, including:
1. The government can form legislation containing the position of Bitcoin or other virtual
currencies as a currency and transaction mechanism both for users and business
managers of Bitcoin.
2. The government can impose taxes on any Bitcoin transactions made by Indonesian and
foreign citizens that occur in the territory of Indonesia.

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 Citation
Books:
Atmasasmita, Romly. 2014. Hukum Kejahatan Bisnis: Teori dan Praktik di Era Globalisasi.
Jakarta: Kencana Prenada Media.
Gelinas, Jacques. 2003. Juggernaut Politics: Understanding Predatory Globalization. Kanada:
Les Editions Ecosociete.
Mahayana, Dimitri. 2000. Menjemput Masa Depan, Futuristik dan Rekayasa Masyarakat
Menuju Era Global. Bandung: Rosida.
Muhammad Mangan, Damian. 2012. Bitcoin: Cara Kerja dan Perbandingannya dengan Mata
Uang Konvensional. Bandung: Institut Teknologi Bandung.
Suparman Sastrawidjaja, Man. 2002. Perjanjian Baku Dalam Aktivitas Dunia Maya, Cyber
Law: Suatu Pengantar. Jakarta: Elips.
Wiwoho, Jamal. 2011. Hukum Perbankan Indonesia. Surakarta: Sebelas Maret University
Press.

Rules:
Undang-Undang Dasar Republik Indonesia Tahun 1945
Undang-Undang Republik Indonesia Nomor 23 Tahun 1999 tentang Bank Indonesia
Undang-Undang Republik Indonesia Nomor 7 Tahun 2011 tentang Mata Uang
Peraturan Bank Indonesia Nomor 18 Tahun 2016 tentang Penyelenggaraan Pemrosesan
Transaksi Pembayaran
Peraturan Bank Indonesia Nomor 19 Tahun 2017 tentang Penyelenggaraan Teknologi
Finansial

Journal:
Harnad, Steven. Post Gutenberg Galaxy: The Fourth Revolutions in the Means of Production
of Knowledge. Public Access Computer Review Volume 2.
Houben, Robby. 2016. The CJEU’s View of Whether Bitcoins are A Currency: A Belgian
Perspective. United Kingdom: Thomson Reuters.
Kalderon, Mark. 2016. Distributed Ledgers: A Future in Financial Services?. United
Kingdom: Thomson Reuters.
Masao, Yanaga. 2017. Virtual Currencies – Regulation and Challenges in Japan. United
Kingdom: Thomson Reuters.

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Ramage, Sally. 2014. Bit Coins – Kiss of Death to Us All in The Developed World. United
Kingdom: Thomson Reuters.
Sidharta, Arief. 2004. Kajian Kefilsafatan tentang Negara Hukum. Jurnal Lentera.
Stuber, Walter. 2014. Brazil: Virtual Currencies – Tax. Brazil: Journal of International
Banking Law and Regulation.
United Nations Office on Drugsand Crime (UNDOC). Juni 2014. Basic Manual on The
Detection and Investigation of The Laundering of Crime Proceeds Using Virtual
Currencies.

Internet:
Lukman, Felix. Mengapa Harga Bitcoin Terus Naik?.
https://www.kompasiana.com/cryptoholix/5a1d73eafcf68159b5366922/mengapa-
harga-Bitcoin-terus-naik. Accessed on January 12th 2018.
Rohmani, Edmalia. Menangkap Momentum Popularitas Bitcoin. http://
http://www.pajak.go.id/content/article/menangkap-momentum-popularitas-Bitcoin.
Accessedd on January 14th 2018.
http://bitcoin.co.id. Accessed on January 12th 2018.
https://finance.detik.com/moneter/2441603/hati-hati-bitcoin-sangat-berbahaya accessed on
January 17th 2018.
https://koran.tempo.co/konten/2018/01/16/426301/Bitcoin-Berpotensi-Mengganggu-
Stabilitas-Sistem-Keuangan accessed on January 17th 2018..

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