Stablecoins are changing the global trade landscape

A recent research report delves into how stablecoins impact global trade, particularly in sanctioned countries, and their importance as a legitimate financial infrastructure.

Main Points

• Stablecoins have evolved from marginal tools into important financial infrastructure for high-risk cross-border commerce, with Russia's use in oil trade being a prime example.

• Although there are restrictions on domestic cryptocurrencies, China and India are benefiting from stablecoin transactions with Russia and are actually experiencing the efficiency of decentralized finance at the national level.

• Governments around the world are adopting different response strategies, but there is a general consensus that stablecoins are reshaping the way cross-border value flows.

Stablecoin: From Speculative Tool to Strategic Currency

The importance of stablecoins is continuously increasing, evolving from a tool for individual speculation to a practical financial instrument at the institutional and even national levels. It was initially widely used in cryptocurrency trading, providing traders with efficient means of capital transfer and liquidity acquisition, especially playing a crucial role in markets with limited banking infrastructure or capital controls.

Subsequently, the application of stablecoins has expanded to the enterprise and B2B sectors. Many companies have started using stablecoins for cross-border payments, supplier settlements, and payroll, especially in emerging markets where traditional banking services are unreliable or costly. Compared to traditional wire transfers, stablecoin transactions settle almost in real-time, without intermediaries, significantly reducing costs.

Currently, stablecoins are being tested at the national level, and their role has shifted from convenience to strategic. Countries facing sanctions or seeking alternatives to the US-dominated financial system, such as Russia, have begun to turn to the use of stablecoins.

The Practical Applications of Stablecoins in Global Trade

Russia is increasingly incorporating stablecoins such as USDT and major cryptocurrencies like Bitcoin and Ethereum into its oil trade with China. This practice represents a strategic effort to evade Western sanctions.

The transaction process is relatively simple: Chinese buyers transfer domestic currency to intermediaries, who convert it into stablecoins or other digital assets, and then transfer it to Russian exporters, who then convert the funds into rubles. This process reduces sanction risks and enhances transaction resilience by excluding Western financial intermediaries.

In these transactions, stablecoins play a key role. Compared to the price volatility of Bitcoin and Ethereum, stablecoins like USDT offer price stability, high liquidity, and ease of transfer, making them an ideal tool for cross-border settlement in restricted environments.

It is worth noting that although China has implemented strict restrictions on domestic cryptocurrency usage, authorities seem to adopt a tolerant attitude towards stablecoin trading in the context of energy trade with Russia. This dual stance highlights a trend: even within officially restrictive regimes, there is a quiet adoption of digital assets for their operational practicality.

Apart from Russia, other sanctioned countries like Iran and Venezuela are also turning to stablecoins to maintain international trade. These examples indicate that the use of stablecoins as a tool to sustain commercial functions in politically constrained environments is on the rise.

Global Stablecoin Development Trends

Many countries are accelerating the exploration of stablecoin adoption. In addition to circumventing external sanctions, many countries see stablecoins as a tool to enhance monetary sovereignty or respond more effectively to geopolitical changes. Their appeal also lies in the ability to facilitate faster and cheaper cross-border transfers.

Multiple countries and regions have taken action:

• Thailand has approved the trading of USDT and USDC.
• Japan has launched a regulated USDC.
• Singapore has established a regulatory framework for a single currency stablecoin.
• Hong Kong has announced the stablecoin bill.
• Although the United States has not enacted comprehensive legislation, it is advancing relevant regulations.
• Major banks in South Korea are preparing to jointly issue the first Korean won stablecoin.

These developments reveal two key trends: first, stablecoin regulation has moved beyond conceptual discussions, with governments actively shaping its legal and operational parameters; second, geographical differentiation is emerging, with different countries adopting varying regulatory strategies.

Despite the differences, there is a global consensus that stablecoins are becoming a permanent part of the global financial infrastructure. Some countries view them as a challenge to sovereign currencies, while others see them as a more efficient tool for global trade payments.

Stablecoin: New Financial Infrastructure

The growing use of stablecoins in cross-border transactions reflects a fundamental shift in financial infrastructure, rather than merely an attempt to evade regulation. Even countries that have historically been skeptical of cryptocurrencies, such as China and India, are beginning to indirectly utilize stablecoins in strategic commodity trading, experiencing their practical utility firsthand.

This development goes beyond sanctions evasion. Stablecoins have evolved from retail-level experiments to integration at the institutional and even national levels, becoming one of the few blockchain innovations that demonstrate genuine product-market fit. As a result, stablecoins are increasingly seen as a legitimate component of the modern financial system, rather than a tool for illegal activities.

Institutions that view stablecoins as structural elements of future financial architecture may find themselves at the forefront of the next wave of financial innovation. Conversely, those that delay participation may face the risk of passively adapting to standards set by others. Therefore, policymakers and financial leaders must understand the nature of stablecoins and their long-term potential, and develop strategies that align with the evolving direction of the global financial system.