Bali governor warned tourists against crypto payments

Bali Governor Wayan Koster warned on May 28, 2023 that foreign tourists using cryptocurrency to pay at hotels, restaurants, shopping centers, tourism destinations or other businesses could face enforcement under Indonesian law.

Koster delivered the warning at a tourism press conference in Denpasar attended by Bali police chief Putu Jayan Danu Putra, Bank Indonesia’s Bali representative Trisno Nugroho and provincial officials. Indonesia’s state news agency ANTARA reported that Koster listed possible responses including administrative sanctions, criminal penalties, business closures and deportation.

The development mattered because Bali was a prominent destination for international tourists and remote workers, including cryptocurrency users. It also exposed a distinction that was easily lost in simplified descriptions of a “crypto ban”: Indonesia permitted crypto assets to be traded within a regulated commodity framework, but did not recognize them as lawful payment instruments.

An enforcement warning, not a new ban

The May 28 announcement did not enact a new national prohibition. Koster instead invoked rules already applicable across Indonesia, including Law No. 7 of 2011 on Currency and Bank Indonesia regulations governing the mandatory use of rupiah and payment-service providers.

Law No. 7 requires rupiah for transactions whose purpose is payment, obligations that must be satisfied with money and other financial transactions conducted within Indonesia, subject to specified exceptions. Article 33 provides maximum penalties of one year of confinement and a fine of 200 million rupiah for failing to use rupiah in covered transactions.

Those figures describe statutory maximums, not automatic punishment for every alleged violation. The surviving event-day record does not identify a tourist charged under Article 33 on May 28, a business ordered closed that day or a completed deportation based specifically on a cryptocurrency payment.

Bank Indonesia Regulation No. 17/3/PBI/2015 separately requires individuals and corporations to use rupiah for cash and noncash transactions within Indonesia. For noncash violations, the regulation describes administrative measures including a written warning, a fine equal to 1% of the transaction value capped at 1 billion rupiah, and possible exclusion from payment traffic. It also contains exceptions, including certain state-budget, international-trade, foreign-grant, foreign-currency deposit and international-financing transactions.

Crypto as an asset remained a separate category

At the press conference, Nugroho drew the operational boundary directly: crypto could be held and traded as an asset under oversight associated with Indonesia’s Commodity Futures Trading Regulatory Agency, Bappebti, but could not be used as a payment instrument.

That distinction was consistent with Bank Indonesia’s existing position. The central bank had stated before May 28 that virtual currencies, including bitcoin, were not legitimate instruments of payment. Its rules also prohibited payment-service providers from accepting virtual currency as a source of funds, processing payments with it or connecting it to payment processing.

The Bali warning therefore did not mean that every possession, transfer or exchange of a crypto asset was treated as an unlawful payment. The relevant question was the transaction’s function. Exchanging a token through an authorized trading channel and tendering that token to settle a hotel or restaurant bill occupied different regulatory categories.

What the announcement established

The verified development on May 28 was a coordinated public warning and stated enforcement posture. Koster said provincial authorities, police and Bank Indonesia would respond to crypto payment activity, while Nugroho said the agencies would continue monitoring and coordination. ANTARA also reported that authorities invited the public to report suspected violations.

The available evidence does not establish how widespread crypto payments were in Bali, how many merchants accepted them, which assets were involved or what transaction value prompted the warning. It also does not show a cryptocurrency-market price effect. The importance of the announcement was institutional: Bali officials publicly applied Indonesia’s existing rupiah framework to a visible tourism economy and emphasized that legal crypto trading did not make cryptocurrency legal tender.