Apex Group founder and CEO Peter Hughes believes the United States could lose ground in digital finance if lawmakers fail to establish clear crypto regulations, giving faster-moving markets in Asia and the Middle East an opportunity to attract businesses and investment.
Hughes warned that continued delays surrounding the U.S. Clarity Act could lead digital asset companies to seek more predictable rules elsewhere. He said Europe is unlikely to gain much from the situation, despite having its Markets in Crypto-Assets Regulation (MiCA) in force since July 1.
In an interview with CoinDesk, Hughes said the uncertainty could encourage firms to explore alternative jurisdictions. He criticized Europe’s framework for being restrictive and slow to evolve, while highlighting Asia, the Middle East and Bermuda as regions moving quickly to create rules suited to emerging financial products.
These markets, he said, could fill the gap left by the United States.
Failed Clarity Act Vote Leaves Crypto Businesses in Limbo
The U.S. Senate failed to pass the Clarity Act in September after the bill fell short of the 60 votes required. The legislation was intended to establish clearer federal rules for digital assets and define the respective oversight roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
Disagreements over ethics provisions, stablecoin rewards and other regulatory protections prevented the bill from advancing.
The delay has left companies developing blockchain-based financial products facing uncertainty about the rules they would need to follow in the U.S. Hughes believes jurisdictions with more agile regulatory processes could attract businesses that might otherwise operate in America.
Following the legislative setback, the SEC and CFTC proposed their own crypto regulatory approaches in an effort to address the lack of consensus among lawmakers.
Apex Group, which services more than $3.5 trillion in assets and operates across 50 jurisdictions, is also expanding its involvement in tokenization. Earlier this month, it announced a partnership with droppRWA and Tokeny to help convert real-world assets (RWAs) into regulated blockchain-based investment products, starting in Saudi Arabia.
Faisal Monai, founder and CEO of droppRWA, said Saudi Arabia has already changed regulations to permit real estate tokenization and increase foreign participation in its property market. He added that the remaining challenge is building infrastructure that connects digital tokens to the legal records of the underlying assets.
Monai said these connections would enable funds to confirm an asset’s existence, value and ownership to investors with greater confidence.
Hughes also suggested that traditional U.S. banks have sought to protect their position in the financial system during discussions over the Clarity and GENIUS acts. Banks have expressed concern that rewards offered by stablecoins could compete with conventional deposits, while lawmakers have raised separate questions about political ethics and regulatory safeguards.
He emphasized that scale will be an important factor in determining which markets lead the next stage of digital finance.
Tokenized Money Market Funds Challenge Traditional Savings
Hughes identified tokenized money market funds as another potential driver of institutional adoption. These products invest in short-term traditional debt while using blockchain tokens to represent investors’ ownership.
According to Hughes, they could compete with bank savings accounts by offering investors a larger share of investment returns. He compared a hypothetical 5% return from a tokenized money market fund with a 3% return from a conventional savings account.
The difference could become an important consideration for investors as tokenized funds become more widely available.
Their usefulness may extend beyond returns. Tokenized fund holdings can potentially serve as collateral, allowing institutions to borrow against their investments instead of leaving capital tied up in traditional accounts. Hughes said major banks are already exploring this application.
He also expects regulated stablecoins that generate yield to become increasingly relevant to corporate treasury operations. Their adoption, however, would depend on issuers meeting requirements such as transparent disclosure of reserve assets.
Hughes said the timeline for widespread adoption remains difficult to predict, estimating that it could take one, three or five years.
Digital Assets Could Expand Investment Access
As regulators become more familiar with tokenization, Hughes expects these products to reach a broader audience, including retail investors and retirement accounts.
Lower investment thresholds, faster product development and wider distribution could make traditional financial products accessible to people who have historically had limited opportunities to invest in them.
Monai sees similar potential in Saudi Arabia, where tokenization could simplify cross-border investment by allowing foreign investors to direct capital into the country without needing to establish a local physical presence.
He expects tokenization to eventually become a mainstream channel for bringing international capital into Saudi Arabia.
