The ripple effects of geopolitical conflicts are reshaping the piping of global trade finance, pushing some commodity traders out of the banking system and into the arms of stablecoins.
That’s according to Luke Sully, CEO of trade finance-focused stablecoin issuer Haycen, who says the war involving Iran has heightened compliance fears among Western banks, sparking a new wave of “debanking” across commodity markets.
“Since the war, banks are further withdrawing from certain commodity flows,” Sully told CoinDesk in an interview.
“We spoke to some commodity traders who are getting hammered now,” he added.
The $2 trillion market
The concern is centered on counterparty risk.
Banks worry that apparently legitimate transactions, e.g. involving companies in Oman or other regional hubs, may have indirect exposure to sanctioned Iranian entities. Instead of taking 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 US$2 trillion market for international trade transactions, has increasingly been dominated by non-bank lenders, including private credit funds that finance the movement of commodities and goods globally.
“Everybody thinks they know about trade finance, but they don’t,” says Sully. “These are predominantly non-bank investment funds that lend to borrowers around the world to move goods and services.”
These lenders provide critical liquidity, often with annual 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 rails, relationships that are now under pressure.
Stablecoins, digital tokens linked to fiat currencies, typically the US dollar, are emerging as an important solution. In particular, Tethers USDT has seen growing use among commodity traders and counterparties operating in emerging markets.
These cryptocurrencies have rapidly evolved from a niche crypto trading tool into one of the fastest growing segments of global finance, with a combined market capitalization of over $300 billion by 2025 after approx. 50% annual growth.
Transaction volume has increased even faster, surpassing $4 trillion by 2025 and now accounting for around 30% of all onchain activity, underscoring their growing role as a medium for cross-border payments and dollar access in emerging markets.
Tether’s dominance
Once primarily used in crypto markets, stablecoins are increasingly being used for real-world use cases, from money transfers to trade settlement, driven by their speed, global liquidity and ability to bypass traditional banking channels.
One such stablecoin is Tether’s USDT, which currently dominates the flow.
“Tether absorbs a lot of the payment flow,” says Sully. “If you want to make a one-time payment to an emerging market, USDT helps.”
The appeal is straightforward: deep global liquidity and widespread acceptance.
“There is so much global USDT liquidity that people don’t mind sending or accepting it as payment,” he added, “because eventually someone in their country will exchange it for dollars.”
The 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 solution for these people than a solution for trade finance in general.”
‘Another Problem’
The geopolitical background also produces more extreme signals.
Sully pointed to reports that bitcoin is being used as a “currency of choice” for payments linked to safe passage through the Strait of Hormuz, a critical choke point for global oil shipments.
“It shows that trade finance is increasingly led and controlled by non-bank actors and non-bank ways of doing business,” says Sully.
Haycen positions himself to capture this shift. The firm 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 non-bank global trade and currently works with industry participants around the world.” The goal is to streamline a highly fragmented system.
Haycen’s model allows users to deposit funds, transact using its stablecoin and potentially earn interest, depending on regulatory eligibility, while avoiding the delays and inefficiencies of correspondent banking.
“The money is not lost for seven days. You can log in, see your deposits and counterparties in one place and settle immediately.”
Unlike most stablecoin issuers, which focus on crypto trading or retail payments, Haycen targets a specific institutional niche. “Every other stablecoin company is a payment company or a crypto trading company,” says Sully. “We’re solving another problem.”
The problem of how to move money efficiently in a fragmented, increasingly risk-averse global trading system can only become more acute as geopolitical tensions continue.
Ironically, Sully notes, the banks’ retreat could accelerate crypto adoption faster than the industry itself ever managed.
Read more: Banks tread cautiously on stablecoins despite market growth, S&P Global says
