Balancing Innovation and Regulation: The Role of RegTech in Cryptocurrency's FinTech Revolution

This paper examines the critical role of Regulatory Technology (RegTech) in addressing governance challenges posed by cryptocurrency systems within the FinTech ecosystem. As decentralized financial technologies disrupt traditional regulatory paradigms, I analyze how RegTech solutions bridge the gap between innovation and compliance. The study first establishes FinTech’s transformative impact on financial services, particularly through blockchain-based systems that enable disintermediation and distributed governance. It then identifies dual regulatory challenges: technology firms must ensure methodological compliance while authorities require adapted oversight frameworks. Focusing on cryptocurrencies as FinTech’s most prominent manifestation, the paper highlights unique supervision difficulties stemming from their decentralized architecture, including money laundering risks and jurisdictional conflicts. The paper evaluates how RegTech tools—from advanced identity verification (MFA, biometrics) to privacy-preserving techniques (zero-knowledge proofs)—enable effective oversight without stifling innovation. The analysis demonstrates RegTech’s capacity to: (۱) implement dynamic compliance protocols, (۲) facilitate cross-border regulatory cooperation, and (۳) balance transparency with data protection in blockchain environments. Drawing on regulatory frameworks from the FSB, EU, and academic literature, It is argued that principles like "same activity, same risk, same regulation" must guide cryptocurrency governance. The paper concludes by emphasizing RegTech’s potential to transform reactive regulation into proactive, technology-adaptive supervision while preserving FinTech’s innovative capacity.

کلیدواژه ها:

RegTech ، Cryptocurrency Regulation ، FinTech Governance ، Blockchain Compliance ، Decentralized Finance