Apex Group CEO Warns U.S. Clarity Act Delay Could Boost Asia and Middle East

Apex Group founder and CEO Peter Hughes cautioned that the U.S. could lose digital asset businesses to jurisdictions in Asia and the Middle East if lawmakers fail to establish clear and predictable crypto regulations.

Hughes said continued delays in U.S. crypto legislation could push companies developing digital financial products to countries offering more responsive regulatory frameworks. Although Europe introduced its Markets in Crypto-Assets Regulation (MiCA) on July 1, he does not expect the region to benefit from Washington’s legislative setbacks.

In an interview with CoinDesk, Hughes said uncertainty surrounding the Clarity Act could encourage businesses to explore alternatives in other markets.

He criticized Europe’s MiCA framework for being restrictive and slow to adapt, while pointing to Asia, the Middle East and Bermuda as jurisdictions moving more quickly to establish rules that support the next generation of digital asset products.

According to Hughes, these regions could attract businesses that might otherwise have chosen the United States.

U.S. Regulatory Delays Create Opportunities for Rivals

The U.S. Senate failed to advance the Clarity Act in September after the legislation fell short of the 60 votes required for passage. The proposed bill aimed to establish a clearer federal regulatory framework for digital assets, including dividing oversight responsibilities between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

Disagreements over political ethics provisions, stablecoin rewards and other regulatory safeguards contributed to the bill’s failure.

The setback has left companies developing blockchain-based financial products uncertain about how their businesses will be regulated in the world’s largest economy. Hughes believes jurisdictions with faster-moving regulatory processes could capture some of that activity.

The SEC and CFTC subsequently proposed their own approaches to crypto regulation as they attempted to address the uncertainty left by the legislative impasse.

Apex Group oversees services for more than $3.5 trillion in assets and operates in 50 jurisdictions. Earlier this month, the company announced a partnership with droppRWA and Tokeny to develop regulated blockchain-based investment products backed by real-world assets (RWAs), beginning in Saudi Arabia.

Faisal Monai, founder and CEO of tokenization platform droppRWA, said Saudi Arabia has already introduced regulatory changes permitting real estate tokenization and expanding foreign participation in its property market.

However, he said the country still needs infrastructure that links each digital token directly to the legal records of the asset it represents.

Monai explained that such connections would help funds assure investors that the underlying asset exists, establish its value and verify ownership.

Hughes also suggested that major U.S. banks have influenced discussions around the Clarity and GENIUS acts as they seek to preserve their position in the financial system. Traditional lenders have expressed concern that stablecoin rewards could compete with bank deposits, while lawmakers have also debated ethical issues and regulatory protections.

He argued that market scale remains a key consideration in determining where these developments will gain traction.

Tokenized Money Market Funds Could Attract Institutions

Beyond crypto legislation, Hughes identified tokenized money market funds as a potential catalyst for greater institutional adoption. These funds invest in conventional short-term debt while issuing blockchain-based tokens that represent investors’ holdings.

He said tokenized funds could challenge traditional savings accounts by delivering a larger share of investment returns to customers. As an example, Hughes compared a fund generating a 5% return with a bank savings account offering 3%.

That two-percentage-point difference could make tokenized money market products increasingly attractive as awareness and adoption expand.

Tokenized funds may also offer an advantage by allowing investors to use their holdings as collateral for borrowing. Rather than keeping capital locked in conventional investment accounts, institutions could borrow against tokenized assets. Hughes said major banks are already exploring this application.

He also expects regulated stablecoins that pay yield to become increasingly useful for corporate treasury operations, provided issuers satisfy requirements such as transparent reserve disclosures.

However, Hughes said it remains difficult to predict when these products will become widespread, estimating that adoption could take one, three or five years.

Tokenization Could Expand Access to Traditional Investments

Hughes expects tokenization to reach more types of investors as regulators become more familiar with the technology. Retirement accounts and retail investors could gain greater access to traditional financial products through smaller investment requirements, quicker product development and wider distribution.

These changes could help make investment opportunities available to people who have historically faced barriers to accessing them.

Monai sees comparable potential in Saudi Arabia, where tokenization could simplify the process for overseas investors seeking exposure to the country’s economy.

He predicted that tokenization could eventually become a mainstream channel for bringing foreign capital into Saudi Arabia without requiring investors to establish a physical presence in the country.

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