Apex Group CEO Peter Hughes warned that delays in U.S. crypto legislation could push digital asset companies toward jurisdictions in Asia and the Middle East, where regulators are moving faster to establish rules for the industry.
Hughes said the failure to deliver a clear and predictable regulatory framework could weaken America’s position in digital finance. He does not believe Europe will automatically benefit from the U.S. setback, despite the implementation of its Markets in Crypto-Assets Regulation (MiCA) on July 1.
Speaking to CoinDesk, Hughes said prolonged uncertainty over the Clarity Act could prompt businesses to seek regulatory clarity elsewhere. He described Europe’s MiCA framework as restrictive and slow to adapt, while identifying Asia, the Middle East and Bermuda as markets making faster progress.
He expects these jurisdictions to capitalize on the gap left by Washington’s stalled legislative efforts.
Clarity Act Stalemate Raises Questions for U.S. Crypto Firms
The U.S. Senate failed to advance the Clarity Act in September after the bill did not secure the 60 votes needed for passage. The proposed legislation was designed to clarify federal oversight of digital assets, assigning responsibilities between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
Disputes over political ethics rules, stablecoin rewards and regulatory safeguards contributed to the impasse.
Without a comprehensive framework, companies developing blockchain-based financial products face continued uncertainty over how their offerings will be regulated in the United States. Hughes believes businesses could increasingly choose markets where rules are evolving more quickly.
The SEC and CFTC have since proposed their own crypto regulatory approaches in an effort to address some of the uncertainty created by Congress’s inability to reach an agreement.
Apex Group, which services more than $3.5 trillion in assets across 50 jurisdictions, is already involved in the growing tokenization market. Earlier this month, the company partnered with droppRWA and Tokeny to help transform real-world assets (RWAs) into regulated blockchain-based investment products, with Saudi Arabia as the initial market.
Faisal Monai, founder and CEO of droppRWA, said Saudi Arabia has introduced regulatory changes that enable real estate tokenization and allow greater foreign participation in its property market. However, he noted that infrastructure is still needed to connect digital tokens directly to the legal records of the assets they represent.
Monai said these links would allow funds to give investors greater confidence in an asset’s existence, valuation and ownership.
Hughes also argued that established U.S. banks may have influenced debate over the Clarity and GENIUS acts as they attempt to protect their role in the financial system. Banks have raised concerns that stablecoin rewards could draw customers away from traditional deposits, while lawmakers have also questioned the bills’ ethics provisions and regulatory protections.
For Hughes, the ability to operate at scale remains a key factor in determining where digital financial products will succeed.
Tokenized Funds Offer an Alternative to Bank Savings
Hughes sees tokenized money market funds as a major driver of institutional adoption beyond the immediate regulatory debate. These products invest in traditional short-term debt while representing investors’ holdings through blockchain-based tokens.
He said they could compete with bank savings accounts by providing customers with a greater share of investment returns. Hughes illustrated the potential advantage by comparing a tokenized money market fund yielding 5% with a traditional savings account paying 3%.
The difference could encourage more investors to consider tokenized funds as adoption increases.
Another benefit is their potential use as collateral. Institutions could borrow against tokenized fund holdings instead of leaving their capital tied up in conventional investment accounts. Hughes said large banks are already investigating this use case.
He also expects regulated, yield-bearing stablecoins to become more important for corporate treasury management, provided issuers meet standards such as transparency around their reserves.
The timeline remains uncertain, Hughes said, suggesting that widespread adoption could take one, three or five years.
Tokenization Could Bring More Investors Into Financial Markets
Hughes believes tokenization will gradually extend beyond institutional investors to include retail customers and retirement accounts as regulators become more comfortable with the technology.
Smaller minimum investments, faster product development and broader distribution could make traditional financial assets accessible to a wider audience, including investors who have previously faced barriers to entry.
Monai expects tokenization to play a similar role in Saudi Arabia by making it easier for international investors to direct capital into the country without establishing a local physical presence.
He believes tokenized assets could ultimately become a mainstream route for foreign investment into the Saudi market.
