TradeFlow Capital Management has deployed more than half of its trade finance capital this year through stablecoins, according to co-founder Tom James, as the firm uses blockchain-based payments to settle transactions. Speaking to Trade Finance Global, James argued that the technology could lower payment costs and accelerate cross-border commodity deals.
James, who is also TradeFlow’s chief executive and chief information officer, said concerns associated with volatile cryptocurrencies had discouraged parts of the trade finance industry from considering stablecoins. He pointed to the US GENIUS Act and the UK’s stablecoin framework involving the Financial Conduct Authority and Bank of England as regulatory developments supporting their use. In his assessment, faster settlement could reduce idle cash and help provide liquidity to smaller businesses underserved by banks.
Tokenisation could also broaden the investor base for trade-related assets, James said. By representing assets digitally on a blockchain, it allows investors to acquire fractional interests rather than committing substantial sums. He contrasted the $1 million minimum investment when TradeFlow launched its funds in 2018 with its blockchain-based electronic notes, through which an investor could technically purchase a $1 interest in a bond. Shipping assets were another example he gave of investments that could become more accessible.
Those opportunities come with additional operational and settlement risks alongside the price, counterparty and shipping exposures already present in commodity transactions. Trade Finance Global cited the collapse of Terra Luna, which erased more than $40 billion in value, as a warning about weaknesses in stablecoin design. James urged firms to investigate the instruments thoroughly and said conventional settlement in fiat currency could provide a fallback if a stablecoin became unavailable.
James also argued that ledger analysis and institutional wallet systems could improve transaction oversight by tracking where funds move and helping firms avoid sanctioned or blacklisted wallets. Separately, the report highlighted concerns that the dominance of dollar-backed stablecoins could weaken local currencies and monetary sovereignty. For companies considering adoption, James said blockchain services supplied through existing software systems offered a less costly route than building proprietary infrastructure.