The ripple effects of geopolitical conflict are reshaping the global trade finance system, pushing some commodity traders out of the banking system and into the arms of stablecoins.
This is according to Luke Sully, CEO of trade finance-focused stablecoin issuer Haycen, who says the war involving Iran has raised compliance fears among Western banks, triggering a new wave of “debanking” in commodity markets.
“Since the war, banks are moving even further away from certain commodity flows,” Sully told CoinDesk in an interview.
“We spoke to some commodity traders who are now being debanked,” he added.
The $2 trillion market
The concern centers on counterparty risk.
Banks are concerned that seemingly legitimate transactions, for example, involving companies in Oman or other regional centers, could have indirect exposure to sanctioned Iranian entities. Rather than take the risk, some institutions are stepping back altogether.
The result is reduced access to traditional railways in a sector that is already largely financed outside traditional banking.
Trade finance, a roughly $2 trillion market for international trade transactions, has been increasingly dominated by nonbank lenders, including private credit funds that finance the movement of raw materials and goods globally.
“Everyone thinks they know about trade finance, but they don’t,” says Sully. “They are predominantly non-bank investment funds that lend to borrowers around the world to move goods and services.”
These lenders provide critical liquidity, often earning annualized returns of around 15%, and enable transactions such as shipping helium from Qatar to South Korea or manganese from South Africa to Indonesia.
But they depend on banks for settlement and payment avenues, relationships that are now under strain.
Stablecoins, digital tokens pegged to fiat currencies, typically the US dollar, are emerging as a key alternative solution. In particular, Tether’s USDT has seen increasing adoption among commodity traders and counterparties operating in emerging markets.
These cryptocurrencies have rapidly evolved from a niche cryptocurrency trading tool to one of the fastest growing segments of global finance, with a total market capitalization set to exceed $300 billion in 2025 after approximately 50% annual growth.
Transaction volumes have increased even faster, surpassing $4 trillion by 2025 and now represent around 30% of all on-chain activity, underscoring its growing role as a means for cross-border payments and access to the dollar in emerging markets.
Tether’s dominance
Stablecoins, once primarily used in cryptocurrency markets, are increasingly being adopted for real-world use cases, from remittances to trade settlements, driven by their speed, global liquidity, and ability to bypass traditional banking barriers.
One such stablecoin is Tether’s USDT, which currently dominates the flow.
“Tether is absorbing a lot of the payment flow,” says Sully. “If you want to make a one-time payment in an emerging market, USDT will help you.”
The appeal is simple: deep global liquidity and widespread acceptance.
“There is so much global liquidity in USDT that people don’t mind sending it or accepting it as payment,” he added, “because someone in their country will eventually exchange it for dollars.”
That growing familiarity is also changing perceptions.
Still, Sully frames this trend as a workaround rather than a long-term solution. “This is more of a workaround for these people than a solution for trade finance in general.”
‘A different problem’
The geopolitical context is also producing more extreme signals.
Sully pointed to reports that bitcoin It is being used as a “currency of choice” for payments linked to safe passage through the Strait of Hormuz, a critical point for global oil shipments.
“This shows that trade finance is increasingly led and managed by non-bank players and non-bank ways of conducting transactions,” says Sully.
Haycen is positioning itself to capture this change. The company issues a US dollar-backed stablecoin, USDhn, designed specifically for trade finance.
According to Sully, “Haycen aims to be the liquidity and settlement layer for global non-bank trading and is currently working with industry participants around the world.” The goal is to rationalize a highly fragmented system.
Haycen’s model allows users to deposit funds, transact using its stablecoin and potentially earn interest, subject to regulatory eligibility, while avoiding the delays and inefficiencies of correspondent banking.
“Funds are not lost for seven days. You can log in, view your deposits and counterparties in one place and settle instantly.”
Unlike most stablecoin issuers, which focus on cryptocurrency trading or retail payments, Haycen targets a specific institutional niche. “All other stablecoin businesses are either payments businesses or cryptocurrency trading businesses,” Sully says. “We’re solving a different problem.”
That problem, how to move money efficiently in a fragmented and increasingly less risky global trading system, can only become more acute as geopolitical tensions persist.
Ironically, Sully notes, the banks’ withdrawal could accelerate cryptocurrency adoption faster than the industry itself ever managed.
Read more: Banks are treading carefully on stablecoins despite market growth, says S&P Global
