Orient Magazine Issue 87 - June 2022 - Page 46

Yee Chuin Lim
Royston Wah

Move Fast and Break Things : Where Regulation Struggles to Keep Pace with Innovation and the Way Forward

Yee Chuin Lim

Head of Public Policy , Speyside Group

Royston Wah

Consultant , Speyside Group
Technological advancements across various sectors from IT , telecommunications , finance , and FMCG are driving and forcing waves of changes in today ' s policy and regulatory landscape . Often , these create significant challenges for policymakers , who try to balance support for innovative practices with a sense of regulatory caution to protect consumers and businesses . In Southeast Asia where most are playing catch-up in the regulatory space , recent and ongoing examples of policymaking have shown that it is crucial for both industry and government to work together to find the right balance , allowing new technologies the latitude to ‘ move fast and break things ’ while setting mutually agreed boundaries to ensure a wider societal acceptability .
Blockchain & Cryptocurrencies
Within the past decade , we saw the emergence of new technologies made possible by blockchain . Cryptocurrencies have been particularly tricky for regulators with their simultaneous roles as a mode of payment and speculative asset . In countries like India , Indonesia and Thailand , the authorities have banned it as a payment tool , citing money laundering , severe market volatility and speculation , and irrevocable transactions as harmful for consumers and the growth of the countries ' financial systems . On the other hand , there are countries like El Salvador and Central African Republic which have accepted Bitcoin as legal tender , partly to address weak currency and runaway inflation issues . For now , most of the world prefer to err on the side of caution by adopting the former position , a reasonable one until concerns around fiscal and monetary stability can be addressed .
However , limiting cryptocurrencies ’ application in payments does not mean the same for other applications of the underlying technology . In Vietnam , Decision No 2117 was issued in 2021 , listing blockchain as a priority for R & D . Its Finance Ministry has also set up a research team studying virtual assets and money . Likewise , in Singapore , the central bank has very recently announced Project Guardian to study DeFi applications in collaboration with the financial industry . The evolving discussions around Central Bank Digital Currencies , such as Indonesia ’ s ambitions to develop their own and Brazil ' s roll out of the Digital Real in 2023 , also highlight that policymakers are careful not to throw the baby out with the bathwater . The key here is to understand how to better regulate and protect the financial systems and consumers alongside these innovations , through national governments and international bodies .
Beyond cryptocurrencies , financial technology ( fintech ) has rapidly matured in the 21st century , alongside ancillary developments such as rising internet and mobile penetration rates , and faster computing speeds . Policymakers welcome fintech ’ s potential to improve financial inclusion and make financial regulation itself more efficient . Many governments in Southeast Asia are implementing long-term roadmaps to support the growth of fintech with favourable regulatory treatment . In Thailand , this is underpinned by the multi-phase Financial Sector Master Plan and the setting up of a Financial Technology Group under the central bank .
However , we also see instances where regulation is