Bitcoin began to be used under the supervision of the Indonesian island of Bali

The Indonesian authorities are investigating the use of bitcoin on the Indonesian island of Bali, amid warnings by central banks in Southeast Asia's biggest economy about the risks posed by the virtual currency, an official said.

Atm-Bitcoin-Indonesia Bitcoin Begins to Be Used under Supervision in Bali Island Indonesia

The investigation began after the central bank on December 7, 2017 issued a regulation prohibiting the use of crypto in the payment system, said Causa Iman Karana, head of the representative office of Bank Indonesia in Bali.

"We found out from some posts on social media that Bali seems to have been a haven for bitcoin transactions," Karana said.

Central bankers and police officers are disguised in late 2017 to investigate a number of businesses in Bali who advertise online that they offer a bitcoin payment service, Karana said.

The team found the two cafes still use bitcoin as a means of payment, but 44 businesses including car rental outlets, hotels, travel companies and jewelers, which previously offered the service, have now stopped, he said.

One of the cafes uses bitcoin only for transactions over Rp 243,000 or about 0.001 bitcoin. A single transaction takes about 1 1/2 hours to process and includes a fee of 123,000 rupiah so this makes wider use for payments, Karana said.

The official refused to name the company because he is still waiting for further guidance from Bank Indonesia in Jakarta.

"The next step is we will ban them as mandated by the law. We ask them not to use it again. Along with the Directorate of Criminal Investigation Unit, we will enact a regulation that all transactions in Indonesia must use rupiah. "

Some local residents in Bali say that bitcoin is used mainly by foreigners on the island, which is the center of Indonesian tourism and has a large expatriate community.

Bank Indonesia has called the ownership of virtual currencies at high risk and tends to be speculative, as there is no authority responsible or officially regulated and because there is no underlying asset on which prices are based.

The virtual currency could also be used for money laundering and terrorism financing, and could have an impact on the stability of the financial system and cause harm to society, he said.

While trading has not been set up so far, the central bank said it was investigating the matter.

Regulators around the world have grappled with how to overcome the risks posed by crypto in currencies, as bitcoin, the world's most popular virtual currency, jumped more than 1,700 percent last year.

Prices have plummeted since South Korea said last week that it could ban domestic crypto-tourism exchanges.

Bitcoin.co.id, an online online cryptocurrency exchange, said on its website that bitcoin trades traded at $ 162.70 million ($ 12,247) per unit after losing about a quarter of that value this week.