In the past year, the momentum behind the use of blockchain and digital asset technologies to transform global trade finance has become unmistakable. While trade finance has traditionally relied on a highly paper-based, institution-centred architecture, recent developments signal a structural shift towards distributed technology that promises greater speed, transparency and inclusion.

One of the most significant trends is the increasing adoption of blockchain platforms to digitise trade documents and settlement processes.

Historically, documentary credits, bills of lading and guarantees were exchanged manually, often involving couriers and complex verification steps that could take days or weeks. Today, blockchain can encode these documents in a tamper-proof digital form, accessible in real time by all authorised parties. This not only reduces administrative overheads but dramatically lowers the risk of fraud, disputes and delays.

Banks and technology firms are piloting systems that facilitate this shift, working alongside international bodies to ensure legal recognition of electronic trade instruments. The use of uniform digital standards, such as frameworks inspired by the UNCITRAL Model Law on Electronic Transferable Records (MLETR), has helped underpin these efforts by providing a consistent legal basis for recognising digital trade records across jurisdictions.

Beyond paperwork, digital asset-based innovations are emerging to bridge the longstanding trade finance gap - the shortfall between demand for financing and the supply willing to underwrite cross-border transactions.

Industry observers have noted that tokenisation, where trade receivables and financing instruments are represented as digital tokens on a blockchain, can open new pools of capital to support trade flows. By making these assets easier to trade and fractionalise, investors who previously could not participate in trade finance markets may now provide liquidity, alleviating some of the structural constraints that have kept the trade finance gap stubbornly high.

Crucially, this technological transformation is not occurring in a vacuum. Regulators are beginning to recognise the importance of coherent frameworks that can govern digital assets and payments.

Regulatory clarity around stablecoins and similar instruments, while evolving, is critical because it touches on how cross-border settlement might one day operate in near-real time, bypassing costly intermediaries. Efforts in regions like the EU under Markets in Crypto-Assets Regulation (MiCA) and anticipatory regulatory sandboxes in the UK signal a gradual shift towards accommodating these innovations in a way that balances innovation with systemic safety.

For smaller businesses, often under-served by traditional trade finance, the promise is particularly profound. Digitised trade finance solutions can reduce barriers to entry by lowering compliance costs and increasing transparency, which enhances creditworthiness assessments. In markets where trade finance penetration has lagged, this can translate into measurable improvements in export performance and economic participation.

In essence, the adoption of blockchain and digital asset-enabled systems could widen access to finance for a broader array of companies, not just those embedded in established supply-chain relationships.

The trajectory of blockchain and digital asset uptake in trade finance points to a more agile, inclusive and resilient ecosystem. While challenges remain around interoperability, legal harmonisation and regulatory uncertainty, the pace of development suggests that digital trade finance systems are rapidly maturing into practical, scalable infrastructure for the global economy.

Further information: https://www.forbes.com/sites/digital-assets/2025/11/20/bridging-wall-street-and-web3---the-25-trillion-trade-finance-gap/?utm_source=chatgpt.com

This article represents the views of the author and not necessarily those of ICC.