The bans on bitcoin continue as countries around the world tries to put a damper on its rise. The fact is more people are seeking refuge in bitcoin and that's evident by the consistent price rise, the demand is there, so while you cannot affect the protocol you can find ways to curb demand.
In the latest bid to keep a 200 million-strong population out of the bitcoin network Indonesia’s Financial Services Authority (OJK) warned that financial firms are not allowed to offer and facilitate sales of bitcoin or digital assets. The decision comes after a rise in bitcoin trading in Southeast Asia’s largest economy.
“OJK has strictly prohibited financial service institutions from using, marketing, and/or facilitating crypto asset trading,” the regulator said in a statement posted on Instagram.
The primary warning behind this is that the value of bitcoin and digital assets often fluctuates and that people are buying into the digital assets they don't fully understand which is true, but do you need to ban it for those reasons?
I don't think so, I think that's a cover-up for limiting capital outflows. In the release they even state:
“Please beware of allegations of Ponzi scheme scams in crypto investments,” it added, without elaborating.
The real reason for the ban
If we look at the market and what it is saying Indonesia has had a total amount of bitcoin and cryptocurrency transactions in 2021 of a massive 859 trillion rupiah ($59.83 billion), up from just 60 trillion rupiahs in 2020. A massive 14x increase in trade, and that is what really is concerning authorities.
Having capital flows of that magnitude in a country that has a 1.1 trillion dollar GDP is a sizable amount at around 5% of the country's global trade. If it continues to rise at this rate, it could quickly reach 10 - 20% of the country's GDP.
Indonesia allows sales of bitcoin and digital assets in the commodities exchange and trading is supervised by the trade ministry and the Commodity Futures Trading Regulatory Agency, but this is not taking ownership of your digital asset but IOU's.
The country's authorities are looking to set up a separate vehicle for those who want to trade digital assets, called the Digital Futures Exchange, to be launched in the first quarter of this year.
However, Bitcoin and other cryptocurrencies cannot legally be used for payments in the country.
Local encouragement against bitcoin
It's not only firms that have been curbed from the bitcoin network, but individuals have also been encouraged to stay clear of bitcoin. As a Muslim country their National Ulema Council, which serves as the country’s authority on Shariah compliance, has claimed Bitcoin is Haram and should not be owned by citizens.
They cite that the assets contain elements of uncertainty, wagering, and harm.
Ban's help hide the current failure of fiat
As you cut off demand to the bitcoin network, countries temporarily reduce the impact of value leaving their local currency to bid up prices. This is only a temporary solution, bitcoin's supply will continue to tighten and with more countries open to it than closed, capital will continue to flow in.
As bitcoin prices rise, it pushes FOMO and exposes the opportunity cost loss of holding fiat. Eventually, the dams you set up will burst and that to me will be a given.
As for those who do have access to bitcoin, you're stacking at an absolute premium right now.
Sources:
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