Asia and Middle East Could Benefit as U.S. Crypto Clarity Act Faces Uncertainty

Apex Group CEO Peter Hughes has warned that continued delays in U.S. crypto legislation could drive digital asset companies toward Asia and the Middle East, where regulators are moving faster to establish frameworks for the industry. Without clearer rules, he said, the United States risks losing business to jurisdictions offering greater certainty for blockchain-based financial products.

Hughes also dismissed the prospect of Europe becoming the main winner from Washington’s regulatory difficulties. Although the European Union’s Markets in Crypto-Assets Regulation (MiCA) took effect on July 1, he considers its approach too restrictive and slow to adapt to changing market needs.

In an interview with CoinDesk, Hughes said the delay surrounding the Clarity Act could encourage businesses to look beyond the U.S. He highlighted Asia, the Middle East and Bermuda as jurisdictions making quicker progress toward regulations that support emerging digital asset products.

Clarity Act Setback Raises Concerns Over U.S. Competitiveness

The U.S. Senate failed to advance the Clarity Act in September after the bill fell short of the 60 votes needed for approval. The proposal aimed to establish clearer federal rules for digital assets and define how oversight would be shared between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

Disputes over ethics provisions, stablecoin rewards and other regulatory safeguards prevented the legislation from passing.

The impasse has left companies developing blockchain-based financial products uncertain about the regulatory requirements they may face in the U.S. Hughes believes businesses could increasingly choose markets where authorities are moving more quickly.

The SEC and CFTC have since proposed their own crypto regulatory measures in an effort to address the uncertainty created by the legislative deadlock.

Apex Group, which services more than $3.5 trillion in assets across 50 jurisdictions, is also pursuing opportunities in tokenization. Earlier this month, it announced a partnership with droppRWA and Tokeny to help develop regulated blockchain-based investment products backed by real-world assets (RWAs), with Saudi Arabia serving as the initial market.

Faisal Monai, founder and CEO of droppRWA, said Saudi Arabia has already introduced regulatory changes that support real estate tokenization and allow greater foreign participation in its property market. He added that the next priority is developing infrastructure that connects digital tokens directly to the legal records of the underlying assets.

Monai said this would enable funds to assure investors that assets exist, establish their value and verify ownership.

Hughes also suggested that U.S. banks have sought to preserve their influence within the financial system during discussions over the Clarity and GENIUS acts. Traditional banks have expressed concern that stablecoin rewards could compete with deposits, while disagreements over political ethics and regulatory protections have added to the legislative challenges.

He emphasized that scale will play an important role in determining where digital finance develops.

Tokenized Money Market Funds Could Challenge Banks

Hughes identified tokenized money market funds as a potential catalyst for institutional adoption. These funds invest in traditional short-term debt while using blockchain tokens to represent investors’ holdings.

He said such products could compete with conventional savings accounts by offering investors a greater share of investment returns. Hughes illustrated the potential advantage by comparing a 5% return from a tokenized money market fund with a 3% return from a traditional bank account.

If the difference persists, investors may have a stronger incentive to consider tokenized alternatives as adoption expands.

Another benefit is the ability to use tokenized fund holdings as collateral. Institutions could borrow against their investments to obtain liquidity without having to sell assets or leave capital tied up in conventional accounts. Hughes said major banks are already exploring this application.

He also expects regulated stablecoins that generate yield to become increasingly important for corporate treasury management. Their wider use, however, will depend on issuers meeting requirements such as transparent reserve reporting.

Hughes said the timing of broader adoption remains uncertain, estimating that it could take one, three or five years.

Tokenization May Expand Access to Global Investment

Hughes expects tokenized financial products to reach more retail investors and retirement accounts as regulators become more comfortable with the technology.

Lower entry requirements, faster product development and broader distribution could make traditional investments available to people who have previously faced barriers to entry.

Monai sees comparable opportunities in Saudi Arabia. He believes tokenization could make it easier for overseas investors to allocate capital to the country without having to establish a local physical presence.

He expects blockchain-based asset tokenization to eventually become a mainstream channel for foreign investment into Saudi Arabia.