Abstract: This research examines the impact of Bitcoin adoption as a cryptocurrency on financial stability in Indonesia. It analyses potential systemic hazards and how banks might effectively handle these risks. Bank Indonesia, the central bank, has articulated apprehensions over the volatility of Bitcoin and its potential ramifications on the nation's monetary aggregates and financial stability. The study seeks to elucidate the implications of cryptocurrency integration into the Indonesian financial system. The research utilises a quantitative approach, integrating a data analysis method. We gather data from financial institutions, regulatory authorities, and Bitcoin users in Indonesia to assess the impact of Bitcoin on financial stability. The findings suggest that, although Bitcoin presents potential advantages like enhanced financial inclusion and innovation, it also entails considerable dangers. These encompass market volatility, cybersecurity concerns, and regulatory obstacles. The study identifies critical areas where banks must improve risk management practices to mitigate them. A significant component of this research is the identification of specialised risk management solutions especially adapted to the Indonesian setting, such as the integration of local regulatory frameworks with international standards and best practices.

Keywords: Bitcoin, financial stability, systemic risks, Indonesia, cryptocurrency integration, banking sector strategies

Pages: 320-332

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