U.S. Crypto Delay Gives Asia and Middle East an Edge

By Nathan Brooks

The U.S. Senate’s Clarity Act fell short of the 60 votes required in September, so its framework for dividing digital-asset oversight between the SEC and CFTC did not take effect. Apex Group founder and CEO Peter Hughes told CoinDesk that the delay could send digital-asset businesses toward faster-moving jurisdictions in Asia, the Middle East and Bermuda.

The vote that failed

The bill would have established clearer federal rules for digital assets and divided oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission. It stalled after disputes over political-ethics provisions, stablecoin rewards and other regulatory concerns.

The SEC and CFTC moved soon afterward with their own crypto-rule proposals, attempting to fill the void left by lawmakers’ failure to reach consensus. For companies building blockchain-based financial products in the world’s largest economy, the delay still leaves the federal treatment unsettled.

Hughes said the United States risks losing digital-asset business if lawmakers delay again or fail to implement a clear, certain regulatory framework. “I think that the Clarity Act and the delay around that will lead to people finding other solutions elsewhere,” he said.

The competitive shift

Europe is unlikely to benefit from the U.S. setback, Hughes said, even though Europe’s Markets in Crypto-Assets Regulation (MiCA) has been in place since July 1. He described MiCA as slow to evolve and restrictive.

Asia and the Middle East are moving quickly, while Bermuda is developing regimes intended to produce financial products for the future. Hughes expects those jurisdictions to fill the gap left by Washington.

Saudi Arabia is emerging as a tokenization hub after regulatory changes opened the country’s real estate market to digital assets and greater foreign investment.

Apex Group is a Bermuda-based global financial firm that services more than $3.5 trillion in assets across 50 jurisdictions. Earlier this month, it announced a partnership with droppRWA and Tokeny to help turn real-world assets into regulated, blockchain-based investment products, starting in Saudi Arabia.

Faisal Monai, droppRWA’s CEO and founder, said the remaining work is infrastructure connecting each digital token directly to the legal record of the underlying asset.

“As long as we can maintain that, then the funds will be able to convey with confidence to their investors that the asset exists, what it’s worth and who owns it,” Monai said.

What does this change for institutional investors?

Tokenized money-market funds invest in traditional short-term debt and issue blockchain-based tokens representing investors’ holdings. Hughes said they can compete with bank savings accounts by passing more investment returns directly to customers.

In Hughes’s comparison, the tokenized fund offers 5% against 3% from a bank savings account, a two-percentage-point advantage. That difference could become an important reason for investors to choose tokenized money-market funds over traditional savings accounts as adoption grows.

Tokenized funds can also serve as collateral, allowing institutions to borrow against holdings instead of leaving money tied up in traditional investment accounts. Hughes said major banks are already examining that use.

Regulated, yield-bearing stablecoins could become important tools for corporate treasuries if issuers meet requirements including reserve transparency. Hughes said it is difficult to judge whether that outcome arrives in one, three or five years.

Banks and the policy fight

Hughes said U.S. banking institutions have influenced the debate over the Clarity Act and GENIUS Act as they seek to protect their position in the financial system. Banks have raised concerns that stablecoin rewards compete with traditional deposits.

The Senate bill also faced significant objections over political ethics and regulatory safeguards. Hughes said the central issue was scale, which he did not believe was present in the faster-moving jurisdictions.

A broader distribution model

As regulators become more comfortable with tokenization, Hughes expects it to reach retirement accounts and retail customers. Smaller investment amounts, faster product creation and broader distribution could bring traditional financial products to people who previously had limited access.

Monai sees a similar opportunity in Saudi Arabia. He predicts tokenization could become the mainstream route for foreign investors to place capital in the country without establishing a local presence.

The market case accompanying the interview assumes diversified real-world-asset stablecoins can sustain 5% to 7% yields from real credit while crypto funding compresses to about 4%. It says GENIUS pushes yield off-chain and projects the total addressable market for RWA stablecoins at $4 billion in three years.

The next checkpoint

The next structural checkpoint is the SEC and CFTC rulemaking process: a workable U.S. framework could retain issuers and institutional capital, while continued delay shifts product development toward the tokenization regimes taking shape across Saudi Arabia, the Middle East and Bermuda.