Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
DOGE Aims to Use AI to Cut 50% of Regulations
RegTech | July 28, 2025
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AI Deregulation in the United States and the Pressure on Canadian Fintech
According to a Guardian report, the United States Department of Government Efficiency known as DOGE has started using a new AI deregulation system to review the entire set of more than 200,000 federal rules and regulations, aiming to deregulate about 50% of the rules by President Trump's first year anniversary or by January 2026.
This massive move is already being trialled at agencies such as the Department of Housing and Urban Development and the Consumer Financial Protection Bureau, and internal reports show that thousands of regulatory sections have already been reviewed, and that 1,083 regulations have already fallen by the waist-side in less than two weeks.
A presentation obtained by Washington Post journalists claims that deregulation could reduce 93% of man hours, and lead to savings that run into the trillions of dollars. While those claims haven't yet been verified by independent auditors and there are already reports from agency employees that the tool has made mistakes by recommending the deletion of rules that are still legally required.
Impact on Canadian Fintech Competitiveness
Doge's deregulation effort is of significant importance to Canada where regulatory policy directly affects the cost and pace of doing business. If American regulators follow through on large scale deregulation, fintech companies in that market will face lower compliance costs and potentially operate faster giving them a competitive advantage.
See: Canada’s AI Competition Report Faces Big Tech Challenges
That could make it more attractive for capital and talent to focus on United States markets while Canadian fintech firms may need to operate in an environment of higher regulatory overhead, unless Canadian policy frameworks are modernized in a careful and deliberate way, too. NCFA's view is that this is both a warning and an opportunity.
Risks of AI Mistakes in Deregulation
Legal experts in the United States have pointed out that no regulation can be repealed without following the procedures required by the Administrative Procedure Act. These include public comment periods legal justification and review. Automated recommendations from an artificial intelligence system will still need to go through that process otherwise the decisions may be overturned by courts.
Congressional oversight bodies are also raising questions about whether this tool has been approved for use on government systems and whether its access to federal data could violate privacy or security rules.
See: Fintechs Face New Green Claim Rules Under Competition Act
While many in industry revel at the thought of deregulation and what it means to their business, there are real risks involved in rushing ahead with automating areas that directly affect public safety and investor protection, so human oversight is still strongly advised.
Implications for Canadian Policy and Investment
Artificial intelligence is not just being used to more efficiently process data but to influence the rules in which financial markets operate. It raises the stakes and can be a potential game changer for anyone or organization that depends on stable and predictable regulation.
"While fewer rules can sometimes mean faster innovation, such sudden and large scale deregulation can also remove guardrails that protect consumers and market integrity, and investors may think twice before putting money into markets that change their rules too quickly."
NCFA View
NCFA believes that Canada should watch this U.S. experiment closely and use it to build a more practical approach ow how AI regulatory technology (Regtech) could be used to help regulators review and streamline rules without allowing a system to autonomously decide which ones to remove.
See: Demystifying AI for Executives: Aligning Strategy with Reality in Fintech
Any such pilot should have human review at every stage in a transparent process that involves the public and clear reporting so that the decisions can be trusted. Canada can also focus on improving its regulatory environment by making the rulemaking process more efficient and modern without compromising on investor and consumer protections.
This will allow our fintech sector to remain competitive without taking the same risks that the United States is now taking. To be clear, time is of the essence.
The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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