Asked what he regarded as the most consequential structural policy changes in the United States, Patrick McHenry did not hesitate. “The top two are AI and digital assets,” he said. For a global banking audience, that answer matters not because it reflects the political priorities of a former senior American lawmaker, but because it captures how the world’s most influential financial jurisdiction is recalibrating the relationship between innovation, regulation and competition. McHenry’s perspective carries weight because of the role he played in shaping financial policy during his two decades in Congress, including as chairman of the US House Financial Services Committee. His work on digital asset legislation, market structure and regulatory oversight placed him close to some of the most commercially significant debates in modern finance. Now advising firms across finance and technology, he views policy not as an abstract exercise, but as a practical force shaping commercial outcomes. He observed that the most important developments in Washington are often obscured by political noise. The bigger shifts are structural. Artificial intelligence (AI) is being treated less as a regulatory containment issue and more as an infrastructure competition. Digital assets are moving from the margins of finance towards operational relevance. Regulatory institutions themselves may become more politically responsive. For financial institutions outside the US, these are not remote domestic developments. American policy continues to influence regulatory assumptions, infrastructure investment, capital markets and competitive behaviour far beyond its borders. Changes in Washington frequently become reference points for policymakers, investors and institutions elsewhere. As McHenry now spends his time advising firms at the intersection of finance, technology and policy, he described part of his role as identifying “the signal amid all the noise of Washington”. For bank leaders, that challenge increasingly extends beyond public policy teams. Leadership now requires understanding how innovation, regulation and market structure are beginning to move together. Digital assets reshape banking competition McHenry’s strongest commercial argument concerns the changing role of digital assets in banking. He described the previous US regulatory environment as materially restrictive for regulated financial institutions seeking exposure to digital asset infrastructure. In his view, the policy environment effectively prevented mainstream banks from engaging meaningfully with the sector, slowing institutional adoption while uncertainty persisted over how digital assets should be treated. That environment has changed because the political context changed. McHenry argued that wider ownership of digital assets and the maturation of the industry forced policymakers across party lines to take the sector more seriously. What had once been viewed as speculative or peripheral became harder to ignore as both a constituency issue and a financial market question. His more important point is that banks may be framing the issue incorrectly. “We will not think of digital assets as a distinct realm,” he said. “Just like a generation ago, we talked about fintech. Every bank is a fintech today.” McHenry also provided a specific reading of the legislative trajectory. He noted that the Clarity Act had passed the House of Representatives with a rare bipartisan two-thirds majority and was moving through the Senate Banking Committee, predicting that it could be signed into law around 4 July, coinciding with the United States’ 250th anniversary observances. Whether or not that timeline proves accurate, his point was that digital asset legislation had moved decisively into mainstream policymaking. That comparison goes to the heart of the commercial question. If digital assets become embedded infrastructure rather than a separate asset class conversation, the strategic issue becomes operational adoption rather than ideological acceptance. Payments, settlement, liquidity and transaction economics become the more relevant battlegrounds. Not every institution will respond the same way. “The big guys obviously are holding back because they see more risk than opportunity,” McHenry said. By contrast, smaller or mid-tier institutions may see greater upside in infrastructure change if it improves their economics or weakens incumbent advantages. McHenry was equally clear that this will not be a sudden transition. Adoption, he argued, will depend on familiar fundamentals such as liquidity, resilience and customer confidence rather than technological novelty alone. He also suggested the commercial incentive is straightforward: more options and lower costs for the market over time. AI becomes an infrastructure race McHenry places artificial intelligence in the same category of structural change, though through a different commercial lens. His argument is that policy posture matters as much as technological capability. He characterised the current shift in Washington as one that allows markets greater room to determine how AI models are deployed and diffused. “The market is going to be able to decide,” he said, contrasting this with a more restrictive regulatory approach. He linked that policy change directly to infrastructure investment and economic activity, arguing that accelerated AI build-out had already contributed to US growth. Whether one fully accepts that conclusion or not, the strategic implication is significant. AI is becoming a competition over infrastructure, investment and economic advantage, not merely a technology adoption issue. For banking institutions, AI is already moving into operational infrastructure. Fraud management, analytics, customer engagement, software engineering and compliance workflows increasingly depend on AI capability. The competitive question is no longer whether banks will use AI, but under what economic and regulatory conditions they will compete. This creates asymmetry between jurisdictions. Banks operating in environments that permit faster experimentation may gain earlier operational advantages, while those facing heavier constraints may move more cautiously regardless of internal ambition. The wider implication is that AI policy increasingly resembles industrial strategy. Financial institutions that treat it solely as a technology implementation question may be understating its strategic importance. Regulation becomes a competitive variable McHenry’s most consequential observations may have been about regulation itself. Asked about the changing relationship between Treasury, regulators and executive power, he responded with unusual bluntness. “Everything is political in Washington.” His argument is that longstanding assumptions about the operational independence of US regulatory agencies are being materially reinterpreted through legal and constitutional developments. He described a shift in which executive authority over regulatory institutions is becoming more pronounced, with courts increasingly accepting broader presidential power over appointments and dismissals. The practical consequence, in his telling, is a regulatory environment that may become more tightly aligned with presidential agendas rather than functioning with the degree of institutional separation many market participants have assumed. McHenry was explicit about the outcome. “Treasury will be able to direct these financial regulators to implement regulatory policies consistent with the president’s agenda,” he said. He was equally clear that the Federal Reserve should remain an exception. McHenry said he expected the Supreme Court to preserve the Federal Reserve’s distinct institutional status, arguing that its governance structure and monetary policy committee framework provide an important buffer from direct presidential control. In his view, this separation remains essential for sound monetary policymaking, particularly in politically sensitive periods shaped by inflation and cost-of-living pressures. For financial institutions, this introduces a different type of competitive uncertainty. Strategy depends not only on regulation, but on predictability. Capital allocation, platform investment and business model adaptation all assume some degree of supervisory continuity. If regulatory posture becomes more sensitive to electoral cycles, strategic planning becomes materially more complex. Outside monetary policy, the broader implication is clear: regulation itself may become a more dynamic competitive variable. Leadership in structural change requires credibility McHenry’s account of how digital asset legislation gained bipartisan support offers lessons beyond policymaking. He rejected simplistic ideological explanations for legislative momentum, arguing instead that policymakers increasingly responded to constituent exposure, industry maturity and credible efforts to create durable rules. Structural reform, in his telling, depended less on partisan conversion than on trust and practical problem solving. His own explanation for building support was revealing. “I will be trustworthy as a partner,” he said, describing the credibility required to work across political lines on enduring policy questions. He added: “The goal here is for us to build enduring policy, not just for the next two years or the next election cycle, but for a generation.” That is a useful leadership principle for business executives confronting structural change. Transformation inside large institutions rarely succeeds through force of mandate alone. Major shifts require alignment among stakeholders who may not begin from the same assumptions or incentives. McHenry’s explanation also highlights the importance of accumulated institutional credibility. Support for controversial change often depends less on the specific proposal than on whether the people driving it are regarded as serious, trusted and durable. In periods of structural transition, credibility becomes a strategic asset. The next banking contest will be fought on multiple fronts McHenry’s broader message is that banking is entering a more contested competitive environment, where technology, regulation and political power increasingly interact. Digital assets, in his view, are likely to move gradually into mainstream financial infrastructure rather than remain isolated experiments. AI is becoming a contest over infrastructure and investment shaped by policy assumptions as much as technical execution. Regulatory environments themselves may become less stable if political cycles exert greater operational influence. That combination creates a more complex strategic landscape for financial institutions. Technology choices can no longer be assessed independently of regulatory direction. Regulatory developments can no longer be treated as passive background conditions. McHenry’s commercial framing remained grounded in fundamentals. “Faster, better and cheaper is the motivator,” he said. For bank leaders, the central question is no longer simply which technologies to adopt. It is whether their institutions are prepared for a market in which the rules governing competition, infrastructure and innovation may be shifting as quickly as the technologies themselves.
