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ndonesia is certainly not alone in Southeast Asia as the nation’s regulators seek to get a handle on the disruptions that technological innovations are bringing to the finance sector across the region.

This June saw Indonesia’s markets regulator under the Trade Ministry, the Futures Exchange Supervisory Board (Bappebti), reportedly move to make cryptocurrency a commodity that could be traded on the country’s futures exchange.  

CoinDesk, a digital media and information services company, reported then that the agency’s market supervision chief, Dharma Yoga, had said Indonesia would also be developing regulations centered on cryptocurrency exchanges, wallet providers and mining companies, taxation and prevention of money laundering and terrorism financing through cryptocurrencies.

The news came despite the nation’s central bank, Bank Indonesia, suggesting late last year that it would prohibit use of bitcoin as a legal payment method.

The latest cryptocurrency developments also followed news that the Indonesia Digital Asset Exchange (INDODAX), one of Indonesia’s largest cryptocurrency exchanges, was on track, according to INDODAX CEO Oscar Darmawan, to have more registered users than the country’s national stock exchange.

The fast-moving challenges and opportunities wrought by fintech are front and center elsewhere across the region. In ASEAN’s second biggest nation as measured by gross domestic product, Thailand, cryptocurrencies are at the heart of a scandal that reads as if from a television drama.

Indeed a local actor is now part of the mix.  As this story unfolds and government regulators respond, it will be important that the further development and application of financial innovations not be unintentionally undercut.  

According to local reports, an investor in the Stock Exchange of Thailand and staff at up to three Thai banks may well have been complicit in a US$24 million scandal involving a businessman from Finland, a Macau casino and a cryptocurrency called Dragon Coin.  

 Described by media as an early investor in Bitcoin who made millions from his ventures, the Finnish national Aarni Otava Saarimaa is said to have lost more than 5,500 bitcoins in a well-orchestrated scam.

The crypto millionaire has told Thailand investigators that he was duped into sending bitcoin to Thai nationals for reinvestment, to include purchase of Dragon Coin, a cryptocurrency that would be used at a casino in Macau — a special administrative region of China.  

Funds generated by the sale of Saarimaa’s bitcoins ended up in multiple bank accounts, including one reported to belong to a local Thai actor, Jiratpisit “Boom” Jaravijit, who was arrested while filming in Bangkok.

 Police have reportedly also said that several employees of Thai banks failed to report money transfers of 2 million Thai baht ($61,000) in a violation of financial industry rules that require reporting of such transfers to the country’s Anti-Money Laundering Office.

Some may well question the pace of technological innovation poised to further disrupt Asia’s financial services industry, including in Indonesia. China has already intervened and acted against virtual currencies, with plans ultimately to create its own.  Still, large parts of Southeast Asia have already benefited from and remain well-positioned to capitalize on financial technology, or fintech, developments.

 This should continue. Indeed, recognizing fintech’s potential to drive even greater access to capital and financial inclusion, Thailand’s central bank — the Bank of Thailand — has taken a leading role in creating an enabling environment for fintech expansion in that nation.

 Lessons from that central bank and others in the region, including the Monetary Authority of Singapore and the ongoing work of regulators in Indonesia, can provide important input to policy makers across the region seeking to think through how best, if at all, to encourage and, as necessary, regulate financial innovations.

 Here are eight directions for consideration, based on a roundtable co-hosted by the Bank of Thailand and the Milken Institute, the non-profit, non-partisan economic think tank where I am the inaugural “Asia Fellow”.  

 These recommendations were drawn from a recently released whitepaper on the future of finance in Thailand, co-authored by colleagues John Schellhase and Staci Warden of the Milken Institute Center for Financial Markets. That report, available online, discusses how policymakers can best achieve their mandate while working to encourage innovation.

First, evaluate current processes for regulatory reforms to determine whether they are adequately responsive to the pace of technological change.

Second, empower regulators to supervise new technologies and entities.

Third, create forums and processes that encourage coordination and collaboration among relevant government agencies.

Fourth, engage in ongoing consultation with both private-sector incumbents and new entrants.

Fifth, encourage the establishment of responsible industry standard-setting bodies.

Sixth, assess the opportunity — and the proper parameters — for the adoption of open-banking solutions for bank-fintech collaboration.

Seventh, take a strategic approach to the cross-border nature of many financial technologies.

Eighth, establish standards for how businesses — both in the financial services industry and in other sectors — collect, store, and share the online data generated by individuals.

 That critical challenge of achieving a balance of innovation and stability is on display increasingly across Southeast Asia and all of Asia and the Pacific, as government leaders and policymakers in the financial industry and other sectors seek to navigate a world in transition marked by rising trade tensions, increasing concerns over cybersecurity and growing inequality.  

 Financial technology innovations that could well benefit the “unbanked” and others who would benefit from greater access to capital could well be stymied by well-intended regulations.  Avoiding this will be all the more important as investigators and regulators, whether in Thailand or Indonesia and elsewhere, continue to decipher and ultimately respond to the latest cryptocurrency challenge and opportunity.

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The writer, a former US ambassador to the Asian Development Bank, is managing director of advisory firm RiverPeak Group, LLC.