Apex Group CEO Peter Hughes warned that America’s failure to deliver clear crypto legislation could send digital asset companies to Asia and the Middle East, where regulators are advancing more quickly. He said prolonged uncertainty over the U.S. Clarity Act risks weakening the country’s competitiveness as businesses look for jurisdictions with more predictable rules.

Hughes does not expect Europe to be the main beneficiary of the U.S. legislative delay, even though the European Union’s Markets in Crypto-Assets Regulation (MiCA) has been in effect since July 1.

Speaking to CoinDesk, Hughes said businesses could turn to other markets if Washington continues to struggle with crypto policy. He described Europe’s regulatory approach as restrictive and slow to evolve, while pointing to Asia, the Middle East and Bermuda as jurisdictions working more quickly to develop frameworks for future digital financial products.

He believes these regions are well positioned to attract companies seeking clearer regulatory conditions.

U.S. Crypto Policy Delays Could Shift Business Overseas

The U.S. Senate failed to pass the Clarity Act in September after the proposal fell short of the 60 votes required. The bill sought to establish a clearer federal framework for digital assets, including defining the regulatory responsibilities of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

Lawmakers remained divided over ethics requirements, stablecoin rewards and other safeguards, preventing the legislation from moving forward.

The lack of a comprehensive framework has left businesses developing blockchain-based financial products uncertain about their regulatory obligations. Hughes said this uncertainty could encourage firms to establish operations in markets where regulators are moving faster.

The SEC and CFTC have since proposed separate crypto regulatory measures in an effort to address some of the gaps left by Congress.

Apex Group, which provides services for more than $3.5 trillion in assets across 50 jurisdictions, is also working to expand the use of tokenized investments. Earlier this month, it announced a partnership with droppRWA and Tokeny to help turn real-world assets (RWAs) into regulated blockchain-based investment products, beginning in Saudi Arabia.

Faisal Monai, founder and CEO of droppRWA, said Saudi Arabia has introduced regulatory changes supporting real estate tokenization and greater foreign participation in its property market. He said the next step is creating infrastructure that directly links digital tokens to the legal records of the assets they represent.

Such connections would help investment funds demonstrate an asset’s existence, value and ownership to investors, Monai explained.

Hughes also suggested that U.S. banks have sought to defend their position in the financial system during debates over the Clarity and GENIUS acts. Traditional lenders have warned that stablecoin rewards could compete with bank deposits, while concerns about political ethics and regulatory protections have also complicated negotiations.

He said market scale will remain a central consideration as the digital asset sector develops.

Tokenized Funds Could Challenge Traditional Bank Accounts

Hughes sees tokenized money market funds as a major opportunity for institutional adoption. These funds invest in conventional short-term debt while issuing blockchain tokens that represent investors’ holdings.

He argued that tokenized funds could attract customers by delivering higher returns than traditional savings accounts. As an example, he compared a hypothetical 5% return from a tokenized money market fund with a 3% return from a bank savings account.

The potential difference in earnings could encourage investors to consider tokenized alternatives as the market expands.

Tokenized funds may also provide greater flexibility by allowing institutions to use their holdings as collateral for loans. This could enable businesses to access liquidity without selling their investments or keeping funds confined to conventional accounts. Hughes said major banks are already examining this possibility.

He also expects regulated stablecoins that offer yield to become more widely used in corporate treasury management, provided issuers meet requirements such as transparent reserve disclosures.

However, Hughes said it is difficult to determine when these products will reach broader adoption, suggesting the process could take one, three or five years.

Tokenization Could Open Investment Markets to More People

Hughes expects tokenized financial products to become available to a wider range of investors as regulators gain confidence in the technology. Retail customers and retirement accounts could eventually benefit from lower investment minimums, faster product development and broader distribution.

These features could reduce barriers to traditional investments and make financial products accessible to people who have previously had limited opportunities to participate.

Monai sees similar potential in Saudi Arabia, where tokenization could make it easier for international investors to invest in local assets without establishing a physical presence in the country.

He expects tokenized assets to become a mainstream mechanism for channeling foreign capital into the Saudi economy.