In spite of decades of efforts to digitalize trade, it remains labor- and paper-intensive. Shipping a container from Mombasa to Rotterdam generates a pile of paper that is twenty-five cm. high. Around thirty actors and more than one hundred people are involved throughout the journey, with the number of interactions exceeding two hundred. The unique characteristics of blockchain make it a promising technology to remove the multiple frictions and inefficiencies that plague international trade today and that have been put into sharp focus during the COVID-19 pandemic. The potential is significant, but technology on its own can do little. Trade digitalization cannot happen in a legal and regulatory vacuum. While law and regulation are often seen as constraints or means to counter unintended consequences of technological developments, they also play a key enabling role. International legal instruments already provide useful guidance in some areas, but gaps remain to be filled and more proactive action is needed across the globe to transpose existing legal instruments into national legislation. International organizations have a key role to play to help coordinate action on these two fronts.

Decentralized finance (DeFi) is an ecosystem of financial applications that are built on top of blockchain networks. DeFi aims to create an open-source, permissionless, and transparent financial system that operates without any central authority. Instead, a smart contract—which is a self-executing contract with the terms of the agreement between transacting parties written into lines of code—replaces financial institutions in the transaction. As a result, DeFi is available to everyone with reliable access to electricity and Internet connectivity. It also serves as a form of non-custodial finance since users maintain full control of their assets and transact through smart contract programs that facilitate peer-to-peer interactions. While DeFi presents huge opportunities, it also poses significant risks to traditional finance ecosystems, including the use of stablecoins and the absence of a know-your-customer framework. This essay argues that for DeFi to secure credibility, it needs to be adequately regulated in a way that aligns with how the technology works.