The paper highlights the critical role of finance in the economy and the risks associated with investment decisions based solely on economic criteria. These risks manifest as errors of the first kind (socially significant projects lacking funding) and errors of the second kind (harmful projects receiving funding). The adoption of the Sustainable Development Goals (SDGs) and the rise of FinTech (high-tech finance) have introduced social and environmental considerations into investment decision-making. The integration of artificial intelligence (AI) in FinTech, particularly through technologies like blockchain, has further automated these processes. This study aims to analyze the current state and future prospects of humanizing FinTech in the AI economy by integrating blockchain into ESG (Environmental, Social, and Governance) finance. The novelty lies in developing a new economic and legal approach to systematically improve the regulatory, institutional, organizational, and managerial aspects of FinTech humanization. The study focuses on break-even projects aligning with ESG principles, examining the influence of state regulation, blockchain technology adoption, and the overall benefits of ESG finance for the 17 UN SDGs.

The literature review establishes FinTech as high-tech finance encompassing electronic payments and automation tools. The concept of humanizing FinTech involves developing sustainable (ESG) finance that avoids negative consequences and provides benefits for society and the environment, while considering economic efficiency. The review examines international experience in FinTech humanization and the role of blockchain technology in supply chain financing, corporate credit information exchange, and risk assessment of SMEs. While fundamental aspects are well-established, the causal relationships of FinTech humanization in the AI economy remain unclear, a gap this research addresses.

The research employs a quantitative approach using structural equation modeling (SEM) to analyze complex cause-and-effect relationships in FinTech humanization. The study uses annual data from 118 countries for 2021-2022. Key variables include: blockchain finance usage (percentage of crypto owners), humanization of the economy (ESG Index), and six factors of state regulation (rule of law, economic freedom, regulatory quality, political stability, government effectiveness, and e-government development). Performance indicators for the 17 UN SDGs also serve as variables. Correlation and regression analyses were conducted to assess relationships between variables, culminating in a comprehensive SEM model that accounts for both direct and indirect effects. The reliability of regression models was checked using the F-test.

The analysis reveals several key findings: 1. **State Regulation and ESG Finance:** The development of ESG finance is strongly (88.67% correlation) mediated by state regulation factors. While economic freedom and e-government progress positively influence ESG finance, improvements in rule of law, regulatory quality, political stability, and government effectiveness hinder its development. 2. **Blockchain and ESG Finance:** The spread of blockchain technologies contributes moderately (17.02% correlation) to ESG finance development. Market factors alone are insufficient for FinTech development; a supportive institutional environment is crucial. 3. **State Regulation and Blockchain Finance:** Government regulation can negatively impact blockchain finance development. Improvements in rule of law, economic freedom, regulatory quality, and political stability hinder blockchain finance, highlighting the need for adjusted institutional environments and regulatory approaches. The cumulative impact of state regulation factors is estimated at 27.18%. 4. **ESG Finance and SDGs:** ESG finance exhibits a strong (close to 90% correlation in most cases) but largely negative impact on the 17 UN SDGs, except for positive effects on SDG 12 (Responsible Consumption and Production) and SDG 13 (Climate Action) and a zero effect on SDG 14 (Life Below Water). This suggests contradictions in the current institutional environment and possibly a formal approach to ESG implementation in FinTech.

The results challenge existing literature by demonstrating that ESG finance development is not solely driven by corporate social responsibility but is strongly mediated by state regulation. The moderate impact of blockchain technology underscores the necessity of a favorable institutional context for FinTech growth. The counterintuitive negative effects of certain government regulations on blockchain finance highlight the need for regulatory adjustments. The largely negative impact of ESG finance on SDGs, except for a few positive cases, suggests inconsistencies in the implementation of ESG principles, necessitating further investigation.

This study contributes to the literature by providing a comprehensive SEM model that elucidates the complex interplay of economic and legal factors influencing FinTech humanization. The findings reveal crucial “market failures” and “institutional traps” hindering ESG finance and blockchain finance development. The authors recommend an economic and legal approach focusing on institutional improvements to foster FinTech humanization and support the achievement of the UN SDGs. Future research should delve deeper into the identified negative implications of ESG finance on the SDGs and explore national peculiarities to develop region-specific policy recommendations.

The study is limited by its reliance on aggregate national-level data, potentially masking variations within countries. The cross-sectional nature of the data limits causal inferences. Further research using longitudinal data and incorporating more granular data at the firm or project level would strengthen the analysis. The focus on break-even projects might not capture the full spectrum of ESG finance activities.