In a clarification of the article title's question, it's not that Bali doesn't want crypto per se, but the Indonesian government definitely sees crypto as a threat to the local currency economy and government market control. Similar to my article on why crypto can be seen as a threat to the U.S. fiat system, Indonesia has for years required all regular currency transactions to be handled and processed using the local Indonesian currency, the Rupiah.

Rooted in a Well-Established Fear

While the original requirement was to counter the threat of U.S. dollars being used as a default currency that could hold more value in protection from local inflation, a well-known old problem in lesser developed countries with weak economies, the Indonesian government created restrictions to make sure the dollar couldn't end up capsizing the Rupiah. Enforcement, of course, was through both civil and criminal charges. And then along comes crypto, which is easily translatable across borders and usable worldwide. Showing up at first in locations with lots of heavy international travelers, like Bali, the spread of crypto has alarmed Asian country governments considerably to the point of clampdowns. India, for example, almost banned crypto altogether last year. For tourists, a violation can be a serious matter with the extension of the law to crypto; Indonesian penalties include up to a year in prison and a hefty fine equaling over $13,300 in the local currency (200 million Rupiah, ouch!).

Other Examples Already Exist

How bad could crypto be from a government perspective for Indonesia? A lot depends on the strength of the in-country economy, but Mexico provides a good example. Being adjacent to the U.S. southern border, the Latin America country has long been heavily dependent on inflow of the U.S. dollar. In fact, tourists are encouraged to pay locally with U.S. dollars versus pesos because, unlike the local currency, the dollar holds its buying power value far better. The underground economy is practically fueled on American dollars, using them in lieu of pesos whenever possible. While the Mexican peso has long been supported by the country's oil industry, in the absence of the dollar the Mexican economy would probably collapse. This is a situation that Indonesia is trying to avoid outright.

Other Reasons Exist Too

The Indonesian government has mutual concerns with other countries on taxation protection and criminal enterprise prevention in regards to digital currencies. Crypto is well-known for being hard to track and extremely powerful at moving large funds across borders quickly. Neither of those things are viewed kindly in government eyes, especially Indonesian regulators trying to make sure locals pay their taxes and that the in-country black market isn't moving goods and money in greater capacity via crypto.

Looking for a Middle Road Approach

Interestingly, the country isn't on board with a total ban on crypto. Digital currencies are still fine to have as assets, and the country is working to establish its own central exchange for crypto in mid 2023 (which has run into a few hurdles). Getting this platform established would, of course, give Indonesia an ability to see all transactions, track tax obligations on income earned, and catch bad characters as well, presumably. The country simply isn't interested in becoming the next El Salvador with a full-scale embrace of crypto as a national currency for barter and exchange.

Don't be an Arrogant Tourist

There are no exceptions with the new rule on banning crypto payments in Bali and elsewhere in Indonesia. Just because a tourist comes from the Europe or the U.S. or Canada doesn't give you special status in-country. So don't be an arrogant donkey's rear and demand special treatment. Stay smart, out of the limelight, and enjoy your travels by being respectful of different country rules. No one wants to deal with an international "Karen," especially not law enforcement in the country you're visiting.