Regulatory bodies face the challenge of balancing innovation in fintech with compliance requirements by adopting a flexible and adaptive regulatory approach. They can achieve this balance by engaging in proactive dialogue with industry stakeholders to understand emerging technologies and business models, identifying potential risks early on, and developing regulations that are technology-neutral yet effective in achieving their intended goals. Moreover, regulators can leverage regulatory sandboxes or pilot programs to test new innovations in a controlled environment before implementing broader regulations. By fostering collaboration between regulators, industry players, and other relevant parties, regulatory bodies can promote innovation while ensuring compliance with existing laws.