Bali imposes strict penalties for payments in cryptocurrencies on tourists

Bali's government is cracking down on crypto payments by foreign tourists. Deportation, penalties, and business closure are among the strict measures.

Bali landscape
Tourists will face deportation, fines, and business closures if they use cryptocurrencies for payments in Bali

Yesterday, local Balinese news agency Antara News wrote about the recent announcement made by the Bali governor, Wayan Koster, who spoke during a press conference about the government’s plan to actively punish the use of cryptocurrencies for payments.

Read also: Indonesia to impose up to 2% VAT and up to 0.2% income tax on crypto under major tax reform

Koster primarily warned tourists of the consequences of paying in cryptocurrency, saying, "Foreign tourists who behave inappropriately, do activities that are not allowed in their visa permit, use crypto as a means of payment, and violate other provisions will be dealt with firmly," and adding, "Strict actions range from deportation, administrative sanctions, criminal penalties, closure of business premises, and other tough sanctions."

According to Koster, Currency Law No. 7 of 2011 is a legal framework that contains the penalties accepted in Bali for the use of cryptocurrencies. The most severe forms of punishment include one-year imprisonment and a fine of 200 million rupiahs, worth $13,300 at press time. To be precise, the law prohibits the use of any currency other than the country’s legal tender, the rupiah. This automatically makes payments in all cryptocurrencies illegal, as well as in foreign fiat currencies.

An even harsher penalty awaits "people who carry out foreign exchange business activities without permission from Bank Indonesia" Koster said, threatening such individuals with up to five years in prison and a fine of 22 billion rupiahs, worth about $1.4 million.

Although it is illegal to use cryptocurrencies for payments in Indonesia, both visitors and citizens of the country are allowed to trade digital assets.

According to the latest research, there were at least 36 businesses in Bali that accepted payments in cryptocurrencies. These included establishments that primarily targeted tourists, such as renting services, restaurants, and meditation retreats.

Read also: Philippine senator calls for investigation into crypto scams and human trafficking in the country

Payments in cryptocurrencies are particularly popular among tourists who do not have access to other widely accepted payment methods due to sanctions. Russians who are cut off from international payment systems are among the major cryptocurrency users in Bali.

As reported by local information platform Kompas, many of the businesses that allowed their customers to pay in cryptocurrency are now accepting payments only in local currency following Koster’s announcement.

Interestingly, despite a seemingly negative attitude towards cryptocurrency adoption in the country, some Inodonese politicians have expressed great interest in the new technology. For example, Mochamad Ridwan Kamil, the current governor of Indonesia's West Java province and former mayor of Badung, attended the Bitcoin 2023 conference in Miami.

The politician revealed that Indonesia is currently in the process of exploring the most effective ways to deploy blockchain technology, especially Bitcoin. Kamil believes that Indonesia has great potential to build an efficient Bitcoin mining infrastructure, as this country has "the second most geothermal potential in the world — more than 800 rivers with hydropower."

The governor also said that Indonesia is already in the process of adopting cryptocurrencies and has over 12 million crypto investors.

"As Bitcoin allows the transformation of energy into money, Bitcoin could be transformative for Indonesia," Kamil said, adding that the oldest cryptocurrency can be a solution for the "unbankable parts of Indonesia," where 40% of people do not have access to banks. Moreover, Kamil believes that "the first [countries] that adopt Bitcoin in a meaningful way will have a big advantage."

Meanwhile, Indonesia's Ministry of Trade planned to establish a national cryptocurrency exchange to act as a clearing house and depository for the local crypto market. Although the original launch date was set for December 2022, the project faced delays.