Patrick McHenry says “digital assets are here to stay” as AI and stablecoins reshape global finance
Patrick McHenry, former United States (US) Congressman and former Chairman of the US House Financial Services Committee, believes the financial system has already entered a structural transition in which digital assets, real-time payments and artificial intelligence (AI) are no longer peripheral technologies but increasingly integral components of financial infrastructure itself.
The transition is unfolding at a time when geopolitical fragmentation, localisation pressures and competing regulatory models are reshaping global trade, capital movement and cross-border finance. Yet, according to McHenry, technology is simultaneously pushing financial systems in the opposite direction, towards greater interoperability, connectivity and lower friction in the movement of value.
This tension between localisation and globalisation has become increasingly visible across Asia Pacific. Jurisdictions such as Singapore, Hong Kong and Malaysia are accelerating work around tokenised deposits, digital asset regulation, cross-border payment linkages and programmable financial infrastructure, while regulators and financial institutions globally continue debating the future roles of stablecoins, central bank digital currencies and private digital payment networks.
McHenry chaired the House Financial Services Committee during one of the most consequential periods of policy debate around digital assets, stablecoins and financial market structure in the US. During his tenure, the Committee oversaw issues ranging from digital asset regulation and payment infrastructure to banking stability, capital markets and financial innovation.
He also played a leading role in advancing the Financial Innovation and Technology for the 21st Century Act (FIT21), which sought to establish clearer market structure rules for digital assets and address the long-running jurisdictional tensions between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
His views come as the US attempts to regain ground in digital asset regulation and deployment after years of uncertainty and regulatory fragmentation. They also come at a time when many Asian financial institutions are increasingly confronting broader structural questions around the future of payment infrastructure, cross-border flows, AI deployment and the role of banks within platform-driven ecosystems.
Speaking ahead of The Asian Banker Summit 2026 in Kuala Lumpur, where he will appear as an international keynote speaker, McHenry argued that the pace of technological change is now reshaping financial systems faster than many regulators, institutions and policymakers fully appreciate.
“We have the movement of money and value across borders and around the globe at the speed of the internet and the connectivity of the internet,” he said. “The pace of integrating technology has changed substantially.”
The US is trying to recover lost ground in digital assets
McHenry was unusually direct in his assessment that the US fell behind both Asia and Europe in establishing regulatory clarity around digital assets and related financial infrastructure.
“The US has fallen well behind the rest of the world in the regulation and adoption of digital assets,” he said, arguing that earlier policy resistance in Washington slowed adoption while other jurisdictions moved ahead with clearer regulatory approaches.
He repeatedly contrasted the US position with developments across Asia, where regulators and central banks have moved more aggressively around digital asset frameworks, tokenisation initiatives and payment innovation.
“Asia has led the way,” McHenry noted. “Countries within Asia have been very advanced with the regulation and adoption of digital assets.”
The contrast is increasingly visible across the region. Hong Kong has accelerated licensing regimes for virtual asset trading platforms and stablecoin frameworks, while Singapore continues to position itself as a regulated hub for digital asset experimentation and tokenisation through initiatives led by the Monetary Authority of Singapore. Malaysia, meanwhile, has expanded work around tokenised deposits and domestic digital asset initiatives under Bank Negara Malaysia.
Europe has also advanced faster than the US in establishing comprehensive digital asset regulation through the Markets in Crypto-Assets Regulation (MiCA), creating a more predictable framework for market participants.
McHenry argued that a central weakness in the US system was not merely the absence of regulation, but the fragmentation of regulatory authority itself.
“Having multiple regulators is maddening and ineffective,” he said. “Allowing regulators to fight against each other does not make for sound policy.”
Much of the debate during his chairmanship centred on the division of oversight between the SEC and the CFTC, particularly around whether digital assets should be treated as securities or commodities. The absence of clear market structure rules created uncertainty for financial institutions, exchanges and technology firms attempting to develop digital asset infrastructure in the US.
McHenry said one of the core objectives behind FIT21 and related legislative efforts was to establish “sound law so that innovators can develop digital asset technology in the US and deploy it in the US”.
He believes the US is now moving into a catch-up phase, particularly around stablecoin regulation and broader digital asset frameworks.
“The US is on the cusp first of a regulated stablecoin, dollar denominated stablecoin regime, and next within the next month or so, law on the regulation of digital assets generally,” he said.
Importantly, McHenry no longer views digital assets as a separate financial category.
“Digital assets are here to stay as a tool of global finance in the world of agentic commerce,” he said.
That phrase “agentic commerce” reflects a broader shift increasingly visible across financial services. As AI systems become more autonomous and digitally native payment infrastructure matures, financial transactions are likely to become increasingly automated, embedded and machine-driven rather than manually initiated through traditional banking channels.
Stablecoins are becoming infrastructure rather than products
One of McHenry’s clearest arguments was that stablecoins are increasingly evolving beyond crypto trading instruments into foundational infrastructure for payments, settlement and cross-border movement of value.
“I think stablecoins are going to be thought of as another infrastructure layer to the world of banking,” he said. “You’ll have tokenised deposits, stablecoins, automated clearing house (ACH) and payment rails all compete.”
This convergence between traditional banking infrastructure and tokenised payment systems is becoming increasingly important across Asia Pacific. Several central banks and financial institutions are now exploring tokenised deposits, programmable payments and interoperable settlement frameworks as part of broader efforts to modernise payment infrastructure.
In Malaysia, Bank Negara Malaysia recently expanded initiatives around tokenised deposits and ringgit-based digital settlement experimentation. Hong Kong has also accelerated stablecoin-related consultations while exploring interoperability between tokenised money and regulated financial infrastructure.
McHenry believes the long-term significance of stablecoins lies less in speculative crypto activity and more in the competitive restructuring of payments infrastructure itself.
“Competition will bring down the cost of the exchange of value and of assets,” he said, describing increased competition between payment rails as “a great societal good”.
He argued that stablecoins, tokenised deposits and traditional payment rails are likely to coexist and compete simultaneously.
“I don’t think digital assets will be thought of as some separate thing,” he said. “They are going to just be a part of the infrastructure of the world finance and the infrastructure of the world of the internet.”
The implications for banks, however, remain significant.
As payments increasingly originate within digital platforms, marketplaces and ecosystems rather than traditional banking channels, financial institutions face growing pressure to defend transaction volumes and maintain relevance in the control of financial flows.
“Banks are going to have to compete for this payments volume,” McHenry said. “Banks are going to have to offer competitive products.”
That competitive pressure is already visible globally. Real-time account-to-account systems, embedded finance models and platform-based payment ecosystems are reshaping fee economics across transaction banking and payments businesses.
Yet McHenry rejected the idea that this necessarily weakens the structural role of banks. “I don’t think this is doom and gloom for banks,” he said. “This is an opportunity for banks to innovate and deploy new technology and compete in this world.”
He repeatedly returned to trust as a core banking advantage. “I don’t think this technology world takes away the role of banks,” he said. “I think it enhances the role of banks because banks are trusted partners.”
The challenge for banks, therefore, is less about survival and more about whether they can adapt quickly enough to remain central to increasingly digital and ecosystem-driven financial flows.
McHenry also argued that regulators should avoid overcomplicating the treatment of different forms of digital money.
“The best way to think about it is the same risk, the same regulation,” he said.
In his view, stablecoins, tokenised deposits and related payment instruments should primarily be understood through the lens of payments risk and operational infrastructure rather than through fragmented or inconsistent regulatory categories.
Technology is globalising flows while geopolitics pushes towards fragmentation
A recurring theme throughout the conversation was the growing contradiction between technology-driven connectivity and geopolitical fragmentation.
McHenry argued that the post-global financial crisis environment introduced a new phase of localisation pressures around both capital and data. “We have had ring-fencing of capital,” he said. “Then we have had this movement of data localisation and it has added a new layer beyond ring-fencing of capital.”
These tensions are increasingly shaping financial infrastructure decisions globally. Governments and regulators are simultaneously seeking greater sovereignty over data, payments and financial infrastructure while technology itself pushes towards more borderless forms of connectivity.
McHenry believes digital infrastructure fundamentally challenges traditional localisation models.
“This digital world is going to make us more interconnected,” he said. “Having a global payments regime enabled by stablecoins and by the internet runs quite counter to ring-fencing capital and data localisation.”
The implications extend well beyond digital assets.
Cross-border payment initiatives across Asia increasingly aim to reduce friction in regional commerce while enabling faster and cheaper settlement between domestic payment systems. Central banks across Southeast Asia are also accelerating interoperability initiatives linking real-time payment networks and quick response (QR) payment systems.
McHenry believes such developments will continue despite broader geopolitical tensions. “You are going to have cross-border products that are going to bring down the cost of remittances and enhance global trade,” he said.
At the same time, he acknowledged that the world is likely moving simultaneously towards greater interoperability and greater fragmentation. Asked whether financial systems are evolving towards interoperable global infrastructure or competing financial blocs, McHenry answered: “Both.”
He compared the evolution of financial infrastructure to the transformation of global communications. “You have on your phone free connectivity globally through Telegram, Signal and WhatsApp,” he said. “Those things are now effectively free and global.”
In his view, financial products and payment infrastructure are likely to evolve in similar ways. “I think likewise you’re going to see global technological products that are going to be available very, very close to free,” he said.
That trajectory, however, sits alongside rising nationalism, localisation and geopolitical contestation. “You have populism making us much more local in our politics,” he said, while “technology becoming more global and free and easy to transact”.
The result, according to McHenry, is an unusually uncertain and transitional period for financial institutions. “It is a complicated time right now,” he said.
He also warned that many financial institutions continue to underestimate the scale of the structural shifts already underway. “We have underrated how significant these structural shifts have been in the last few years, but especially over the last year,” he said.
Those shifts increasingly involve not only payment infrastructure and capital movement, but also the restructuring of technology stacks, cloud infrastructure, AI deployment and digital sovereignty across different geopolitical spheres.
AI may transform banking faster than institutions can adapt
While digital assets and stablecoins dominated much of the interview, McHenry repeatedly returned to AI as the next major structural transformation confronting financial services.
Unlike earlier technology cycles, he argued that financial institutions already possess many of the operational characteristics needed to deploy AI effectively. “Financial services firms have the best opportunity to deploy these new models of any industry in the world,” he said.
He believes this is because banks and regulated financial institutions already operate within systems that require auditability, explainability, verification and regulatory oversight. “We want audibility. We want to be able to verify. We want to be able to audit. We want to be able to ensure regulatory compliance,” he said.
In his view, AI has the potential to materially reduce banking cost structures while expanding access to financial services. “There is a huge market opportunity for financial firms, especially banks, to use technology to enhance their business and reduce their cost structure,” he said.
Yet the AI transition is unfolding against a backdrop of intensifying geopolitical competition.
“There is certainly a large geopolitical race on AI between China and the US,” McHenry said, warning of “a serious bifurcation” between competing AI ecosystems and infrastructure models.
That bifurcation increasingly affects decisions around cloud infrastructure, semiconductors, compute capacity, cybersecurity and data governance.
McHenry argued that the current US approach towards AI differs significantly from earlier technology cycles because governments are now actively encouraging rapid deployment. “You now have the US government pushing industries to use and adopt AI, deploy AI in order to compete globally, but also to protect their infrastructure from cyber threats,” he said.
He believes one of the greatest risks is not necessarily technical failure but political backlash against the pace of AI-driven disruption. “The risk is less the list you give and more how the average citizens will accept it,” he said, referring to concerns around transparency, bias and infrastructure concentration.
He also warned that regulators and institutions risk underestimating the speed at which AI capabilities are evolving. “I think there’s a risk of not keeping pace with AI,” he said.
The arrival of increasingly advanced AI models and the emergence of quantum computing are, in his view, significantly increasing cyber and operational risks. “With each new model of AI and the advent of quantum computing, this risk factor has gone up extraordinarily just in the last few months,” he said.
Financial institutions can no longer wait for certainty
One of McHenry’s clearest messages to financial institutions was that waiting for complete regulatory clarity before deploying technology is no longer viable.
“I don’t think you can build technology for five years,” he said. “You have to be able to deploy technology on an annual and quarterly basis.”
The pace of AI development, digital asset infrastructure and payment innovation is now compressing technology deployment cycles across financial services.
McHenry argued that institutions increasingly need adaptive infrastructure rather than fixed long-term technology roadmaps.
“You have to take a quarterly or annual view of this and be ready to adapt and change with these new models and this new capacity,” he said. That acceleration is forcing banks and regulators into a difficult balancing act between innovation, resilience and financial stability.
McHenry nevertheless warned regulators not to neglect traditional banking disciplines amid the rush towards technological transformation. “The biggest mistake would be taking your eye off traditional measures of safety and soundness and liquidity,” he said.
At the same time, he argued that over-restricting AI deployment would create its own risks. “Holding back on AI models will not make the world more safe or sound,” he said.
For financial institutions themselves, the challenge increasingly lies in operating amid uncertainty rather than waiting for complete clarity. “They have to be uncomfortable with a lack of clarity,” McHenry said. “They have to deploy and be on the leading edge of deploying technology even without 100% certainty.”
Financial infrastructure is becoming the new arena of strategic competition. McHenry’s remarks ultimately point towards a broader restructuring of financial systems in which payments, digital assets, AI and cross-border infrastructure are converging into a single strategic layer.
What is emerging is not simply another phase of fintech innovation, but a deeper contest over the architecture through which value moves globally.
That contest is increasingly occurring simultaneously across several fronts: between stablecoins and traditional payment rails, between public and private digital money, between localised regulation and global technological connectivity, and between competing geopolitical technology ecosystems.
Asia has moved aggressively into this transition, particularly around tokenisation, real-time payments and cross-border interoperability. The US, according to McHenry, is only now beginning to accelerate its own regulatory and infrastructure response.
At the same time, the underlying direction of travel remains uncertain. Technology is globalising financial connectivity even as geopolitics pushes towards fragmentation and localisation.
For banks and financial institutions, the challenge is no longer simply whether to adopt digital assets or AI. It is whether they can reposition themselves fast enough within a financial system where infrastructure, interoperability, compute, data and the control of flows are becoming increasingly inseparable.
The institutions that adapt successfully may not necessarily be those with the largest balance sheets or the broadest distribution, but those able to deploy infrastructure, partnerships and technology quickly enough to remain central to the movement of value itself.
McHenry believes that transition is already well underway. “We have underrated how significant these structural shifts have been,” he said. “And we are still trying to debate how long-lasting that will be, and what the world looks like hereafter.”
McHenry is a featured keynote speaker at The Asian Banker Summit 2026, taking place 13 & 14 May in Kuala Lumpur.