The Impact of AI-powered Regulatory Technology (RegTech) on Fintech Governance in a Decentralized Finance (DeFi) Landscape

The convergence of artificial intelligence (AI)-powered RegTech and Decentralized Finance (DeFi) is reshaping financial governance with unprecedented complexity. This research delves into the impact of AI-powered RegTech on fintech governance within the dynamic DeFi landscape. We analyze how AI-driven compliance solutions, including automated AML/KYC and transaction monitoring, are influencing risk management, regulatory adherence, and transparency in the inherently decentralized DeFi ecosystem. Through case studies, data analysis, and expert interviews, we explore key questions: how is AI-powered RegTech adapting to the unique challenges of DeFi's distributed structure, what governance models are emerging in response, and how are regulators leveraging AI to supervise DeFi activities? We examine the potential benefits of AI-powered RegTech, such as enhanced user privacy, data-driven risk assessments, and efficient regulatory compliance, while also acknowledging the risks of algorithmic bias, opacity, and potential regulatory capture. By critically analyzing the interplay between AI, RegTech, and DeFi governance, this research aims to provide valuable insights for fintech developers, regulators, and policymakers to navigate this rapidly evolving landscape and ensure responsible and secure financial innovation.