UCP 600 & Stablecoin

What is a Stablecoin?

A stablecoin is a type of digital token designed to maintain a steady value, usually by being linked to something more familiar and predictable, such as the US dollar, the Euro, or even gold. Unlike traditional cryptocurrencies such as Bitcoin or Ethereum, prices of which can fluctuate wildly, the aim of a stablecoin is to behave more like cash, predictable, easy to account for, and useful for making payments.

How does it work?

Most stablecoins are backed by assets. For example, a bank or issuer might hold one dollar in reserve for every one dollar-linked stablecoin it issues. This way, in theory, the token can always be exchanged for its underlying asset. Others may use more complex methods, such as holding a basket of assets or relying on algorithms, but the common goal is to keep the token’s value stable.

Why do they matter?

Stablecoins are intended to combine the speed and efficiency of digital technology with the trust and predictability of traditional money. They can be transferred instantly, across borders, without going through multiple banks or payment processors, making them particularly attractive for:

• Cross-border trade and remittances: faster, cheaper, and more transparent international payments.
• Everyday payments: allowing digital wallets to hold a currency that does not fluctuate widely in value.
• Settlement in financial markets: reducing risk by providing near-instant exchange of value.

Where do banks fit in?

Banks can issue their own stablecoins, backed by their reserves, creating a new digital payment channel underpinned by trusted financial institutions. This contrasts with private or unregulated crypto tokens, thereby offering customers confidence that the coin really does represent what it claims.

How does this align with Trade Finance?

Stablecoins combine the efficiency of digital technology with the trust of regulated finance. For international trade, where complexity, cost, and time delays are constant pain points, they may offer transformative benefits including:

• Faster cross-border settlement: moving value instantly across jurisdictions, bypassing the traditional correspondent banking chain.
• Lower costs: fewer intermediaries and near-real-time settlement reducing transaction fees and operational overheads.
• Reduced risk: when combined with digital trade documents (enabled by the UK Electronic Trade Documents Act or MLETR), allowing for atomic settlement with payment and document transfer occuring simultaneously, cutting settlement and counterparty risk.
• Transparency and compliance: transactions are recorded on secure digital ledgers, improving auditability and reducing exposure to fraud.

Connection with Trade Finance instruments

With regard to documentary credits, settlement could be made directly in stablecoins, with banks reducing nostro/vostro dependencies and corporates receiving funds faster.

Under standby credits and demand guarantees, stablecoins could be used for quick, irrevocable settlement upon demand, improving liquidity.

And by involvement in supply chain finance, tokenisation and stablecoin payment channels could accelerate discounting and receivables financing.

Current environment

A number of global financial institutions are piloting or developing stablecoin networks, positioning them as trusted alternatives to private crypto. This goes beyond the cautious stance of central banks and reflects a recognition that profitability grows as networks expand and stablecoins remain in circulation.

Potential role of the ICC

As adoption accelerates, the ICC could establish an essential role in ensuring:

• Standards and interoperability: stablecoins already align with ICC rules (UCP 600, URDG 758, eUCP, URDTT) and legal frameworks (ETDA, MLETR).
• Advocacy and education: banks, corporates, and regulators need to understand both the benefits and the safeguards.
• Global networks: financial institutions remain at the centre of shaping cross-border settlement, rather than adapting to frameworks set elsewhere.
• Settlement: stablecoins have the potential to offer faster trade finance settlement, reduced risks, and re-aligned profitability models.

Alignment with ICC Rules

UCP 600 – Documentary Credits

• UCP 600 is agnostic to the form of settlement currency; what matters is that payment is made “in accordance with the terms and conditions of the credit.”
• If a credit specifies settlement in a particular stablecoin (e.g. USD-backed token), then the bank’s obligation to pay can be discharged by transferring that token to the beneficiary’s wallet, provided the parties agree and the credit terms allow.
• The mechanics of stablecoin settlement (instant, verifiable, ledger-based) align with UCP 600’s requirements for certainty, irrevocability, and compliance with stated terms.

eUCP Version 2.1 – Electronic Presentations

• Stablecoins fit naturally with eUCP, which provides for fully electronic presentations.
• If electronic documents are presented and examined under eUCP, payment can be executed in stablecoin form, with the transfer of digital value dovetailing with the digital examination of documents.

URDG 758 – Demand Guarantees & Standbys

• URDG 758 requires that on a complying demand, payment be made promptly. Stablecoins can provide immediate value transfer, enhancing speed and certainty.
• The irrevocability and independence principles are preserved, but execution is strengthened by instantaneous settlement without cross-border banking delays.

URDTT – Digital Trade Transactions

• URDTT was designed to operate in a natively digital environment. Stablecoins provide the settlement “leg” for digital trade transactions, ensuring atomic settlement alongside digital documents.
• By embedding stablecoin channels into URDTT transactions, banks can reduce operational friction and ensure alignment with the ICC’s digital rule set.

Alignment with Legal Frameworks

UK Electronic Trade Documents Act (ETDA)

• ETDA gives legal effect to electronic trade documents (e.g. bills of lading, warehouse receipts) by recognising them as equivalent to paper originals if certain reliability criteria are met.
• Stablecoins complement this by enabling delivery-versus-payment (DvP): the digital document and the stablecoin payment can change hands simultaneously.
• This reduces settlement risk, the exporter only releases the digital bill of lading when payment in stablecoin is received.

UNCITRAL Model Law on Electronic Transferable Records (MLETR)

• MLETR underpins ETDA and provides a harmonised global framework for recognising electronic transferable records as functionally equivalent to paper.
• Stablecoins fit within this framework as the digital means of value transfer corresponding to those digital records.
• When an electronic bill of lading or promissory note is transferred under MLETR, settlement in stablecoin provides a legally recognised, interoperable mechanism for discharging obligations.
• The combination of MLETR-compliant documents and stablecoin settlement creates the foundation for true “atomic” digital trade, payment and document transfer occurring in one seamless action.

Summarising, ICC rules already provide the flexibility for stablecoins to be a settlement currency, provided they are specified in the credit or guarantee. Their speed and verifiability enhance compliance with UCP 600, eUCP, URDG 758, and URDTT. ETDA and MLETR supply the legal foundation for recognising electronic documents. When combined with stablecoin settlement, they enable fully digital, risk-reduced, and legally enforceable trade transactions.

The below table summarises how stablecoin adoption aligns with ICC rules governing trade finance and with key legal frameworks (ETDA and MLETR). It highlights how stablecoins can serve as a compliant, efficient settlement instrument across both rule-based and legislative contexts.

Dave Meynell

September 2025