Indonesia has banned using virtual currencies such as bitcoin there, in latest regulatory blow for the increasingly popular digital currency.

"Bank Indonesia states that bitcoin and other virtual currency are not currency or legal payment instrument in Indonesia," the central bank said in a statement.

"The society is encouraged to be careful toward bitcoin and other virtual currency. All risks related to the ownership/use of bitcoin should be borne by the owner/user of the bitcoin and other virtual currency."

Bitcoin is currently trading at $865.3 on MT Gox exchange.

Growing Regulatory Hurdles

Bitcoin was launched in 2008 and is traded within a global network of computers. They can be transferred without going through banks or clearing houses, reducing fees involved in the services significantly.

The digital currency has steadily been gaining in popularity despite the volatility in its value. The virtual currency exists as software and is not backed by any country or banking authority.

Several companies across the globe have adopted bitcoin as a payment option, despite warnings by regulatory bodies in many countries including those in the US, Europe and India about the risks of virtual currencies.

Recently, the Bank of Russia issued warnings, saying bitcoin users could be unintentionally breaking laws by aiding money launderers and terrorists.

Earlier, the central bank of Estonia has discouraged consumers from using bitcoin, saying it may act more like a Ponzi scheme than an alternative currency or an electronic payment system.