TradeFlow Capital Management has deployed more than half of its trade finance capital through stablecoins in the year discussed in a Trade Finance Global interview, according to co-founder and chief executive Tom James. He argued that the payment mechanism could accelerate cross-border commodity transactions and reduce costs, despite continuing unease among some governments and institutional investors over its links with cryptocurrencies.
James told Trade Finance Global that stablecoins could reduce the amount of capital left idle during transactions and improve liquidity for small and medium-sized businesses unable to obtain traditional bank financing. He pointed to the US GENIUS Act and the UK framework involving the Financial Conduct Authority and Bank of England as regulatory developments supporting their use. In his assessment, these arrangements were already helping the market function.
Beyond payments, James said blockchain-based tokenisation could open investment in physical assets to investors with relatively little capital. Digital representations of assets allow ownership to be divided into smaller stakes, including interests in ships. TradeFlow’s funds required a minimum investment of $1 million when launched in 2018, he recalled. Its blockchain-based electronic notes could technically accommodate an investment of just $1 in a bond, illustrating the potential reduction in entry barriers.
Those benefits come with additional risks. Trade Finance Global noted that commodity transactions already expose participants to price movements, counterparty failures and shipping problems; stablecoins add operational and settlement vulnerabilities. The outlet cited the collapse of Terra Luna, which erased more than $40 billion in value following problems with its algorithmic reserve mechanism. James stressed the need for thorough checks on stablecoins and said settlement in conventional fiat currency provided a fallback if a digital payment mechanism became unavailable.
James also argued that blockchain records and institutional wallet systems could strengthen transaction monitoring. Examining ledger data allows firms to trace where digital assets move and identify recipient wallets, which he said helps keep transfers away from blacklisted or sanctioned wallets. However, Trade Finance Global highlighted a broader policy concern: the dominance of dollar-backed stablecoins in digital payments could weaken local currencies and monetary sovereignty, particularly in emerging markets across Asia-Pacific and Latin America.