Why West’s crypto rules matter for East’s financial future

Synopsis

The US CLARITY Act addressing legal uncertainty will shape global crypto regulation. Eastern hubs like the UAE and Singapore are moving ahead. India, a leader in crypto adoption, has a historic chance, but must rapidly evolve its domestic framework to attract institutional capital and financial infrastructure.

Last month in New York, Rob Goldstein, the COO of BlackRock told me something surprisingly simple: “The biggest problem in crypto today is not technology. It is legal uncertainty.” That observation came up repeatedly in conversations with investment firms, lawyers, exchanges, and policy advisors across the United States. Everyone was talking about the CLARITY Act.

The proposed U.S. Digital Asset Market Clarity Act is a formal market structure framework, with defined rules around custody, customer asset segregation, exchange registration, anti-money laundering obligations, and conflict-of-interest controls. The bill already passed the U.S. House of Representatives with bipartisan support in July 2025 and recently cleared the Senate Banking Committee in May 2026. It now moves toward a full Senate vote, where its prospects may narrow as the 2026 midterms approach.

Here is why this matters far beyond Capitol Hill. When the United States sets financial standards, the rest of the world takes notice. That happened with banking compliance, derivatives regulation, and sanctions frameworks. Crypto will not be different.

Crypto TrackerTOP COINS (₹) The numbers point to where markets are heading. Global stablecoin supply has crossed $230 billion in 2026, according to DeFiLlama data. Tokenised real-world assets have expanded beyond $26 billion globally, according to RWA.xyz. Tokenised U.S. Treasuries have emerged as one of the fastest growing segments as institutions increasingly explore blockchain-based settlement, collateral mobility, and onchain capital markets.

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View Details »Europe’s MiCA regulations have shown that clearer rules attracted institutional positioning. Singapore and Dubai built licensing frameworks specifically designed to pull crypto infrastructure businesses. The U.S. spent years regulating mostly through enforcement and litigation. The result was not less crypto activity but fragmentation where liquidity moved offshore, companies restructured internationally, and innovation migrated to jurisdictions with much clearer legal and regulatory certainty.

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Stablecoins already allow capital to move globally in minutes instead of days, while tokenised assets increasingly settle outside traditional market hours. The CLARITY Act is essentially asking how this new financial infrastructure can be integrated into the existing system without breaking either side. Markets need rules and institutional finance scales on predictability, not ideology.

The most telling signal is how quickly the rest of the world is responding. In the Middle East, the UAE has emerged as the region’s dominant hub. Dubai’s Virtual Asset Regulatory Authority expanded its framework in 2026 to cover derivatives, token issuance, lending and institutional activity. The UAE has also approved dirham-backed stablecoins and expanded blockchain-based payment infrastructure across banking and real estate. Regulation institutionalized the market instead of slowing it down.

In Southeast Asia, Singapore has doubled down on institutional digital asset infrastructure. The Monetary Authority of Singapore expanded Project Guardian in 2026 to include tokenized bonds, foreign exchange settlement, and cross-border asset tokenization pilots involving global banks and asset managers. At the same time, Singapore tightened licensing requirements under its Financial Services and Markets Act, requiring firms serving overseas clients to operate under domestic oversight. The message was that digital assets are welcome but only within a regulated institutional framework.

South Asia is now entering its own regulatory transition. Pakistan, which ranked among the world’s fastest growing crypto adoption markets in the Chainalysis 2025 Global Crypto Adoption Index, passed the Virtual Assets Act 2026 in March, creating the Pakistan Virtual Assets Regulatory Authority and establishing a licensing framework for exchanges, token issuers, custodians, and DeFi platforms. The country has also begun exploring Bitcoin mining and AI datacenter infrastructure using surplus electricity capacity. South Asia is increasingly competing over who will regulate and capture the infrastructure around them.

For India, this shift carries particular weight. India ranked first globally in the 2025 Chainalysis Global Crypto Adoption Index, leading across retail participation, institutional activity, and DeFi usage. At the same time, India’s UPI network processed more than INR 314 lakh crore in transaction value during FY2025-26 and accounts for nearly half of all real-time digital payments globally, as per India’s Ministry of Finance. That experience is directly relevant now because the next phase of digital assets is more about financial rails, settlement infrastructure, digital identity, and cross-border capital movement.

That foundation is now being extended. India’s e-rupee pilot crossed 1 million transactions per day in 2026, according to Reserve Bank of India disclosures, while the RBI and major Indian banks expanded tokenised deposit and programmable payment trials using blockchain-based settlement infrastructure. India also used its 2026 BRICS presidency to push discussions around cross-border CBDC interoperability and local-currency settlement frameworks, signalling that the e-rupee is increasingly being viewed as part of future international payments infrastructure rather than just a domestic retail experiment.

The larger question is whether the regulatory framework around private digital assets, stablecoins, and tokenised assets will evolve fast enough to support the next phase of institutional participation and capital formation.

The jurisdictions that move first on regulatory clarity tend to capture the exchanges, custody firms, compliance infrastructure, and developer ecosystems that follow. India already has the user base. The question is where the infrastructure investment, the institutional capital, and the high-value jobs in financial technology end up consolidating. This is a capital markets and financial infrastructure race, and it’s already underway.

The CLARITY Act could help define how digital asset markets function inside the real financial system and that definition will ripple outward to every jurisdiction still deciding its path. Over the next few years, clearer U.S. market structure rules could accelerate institutional capital flows into regulated digital asset infrastructure across the Middle East, Southeast Asia, and South Asia, rewarding jurisdictions that move early on legal clarity and financial interoperability. India, with its scale, developer talent, and UPI foundation, is better positioned than most to benefit from global clarity.

The banker in New York was right. Legal uncertainty remains the biggest bottleneck. As major economies install clearer rules, India has a historic window to shape its financial future by leading in a way that matches its unique strengths and ambitions. That window will not stay open indefinitely.

(The author Gracy Chen is CEO, Bitget)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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