Geopolitics, digital assets, and the future of financial power

Just a few months into 2026, investors have already had to cope with wild,  unpredictable market swings due to the ongoing conflict in the Middle East, a consequential energy crisis, and Truth Social posts that almost instantly add or wipe off hundreds of billions of dollars from asset prices. This is compounded by the growing use of sanctions and increasing economic fragmentation. 

And geopolitics isn’t just driving headlines and short-term market movements; it is also fundamentally redefining how trade, capital, and financial systems operate, and as a result, is reshaping the use of the infrastructure behind trade. 

Traditionally, global finance relied on centralised systems like banks, SWIFT, and the USD clearing network. These systems are widely trusted, but are also controlled by governments to enable appropriate oversight. This allows them to be increasingly used as a tool of foreign policy, whether through the application of tariffs, sanctions, freezing assets, and, in some cases, restricted access to payment systems.

For instance, in response to the invasion of Ukraine, several Russian banks were removed from SWIFT in 2022, imposing financial isolation on Russia. Today, the conflict in the Middle East, particularly the threats to shipping through the Strait of Hormuz, is having a knock-on effect on financial systems by tightening trade finance and prompting interest rate hikes.

And when financial infrastructure gets tied to geopolitics, businesses, investors, and governments begin considering how to reduce reliance on a single financial system. This is where digital assets come into the picture. 

Digital assets as emerging financial rails

For many years, the role of digital assets wasn’t fully understood. However, as the global economy has grown more and more politically complex, digital assets have never been more attractive. 

Stablecoins, tokenisation, and blockchain-based settlement networks all represent new forms of financial rails. They facilitate money’s movement across borders, without relying entirely on traditional banking rails. For example, in Argentina and Venezuela, citizens regularly convert their wages into US dollar–backed stablecoins to protect their savings from rapid devaluation. 

This doesn’t mean that digital assets will replace the existing financial system. Digital assets will increasingly operate alongside them, creating additional pathways through which capital can move. 

In periods of geopolitical disruption or conflict, traditional financial channels tend to slow down and grow restricted, and having multiple pathways can become integral. Digital asset infrastructure could then help support the continued movement of value globally. 

Ukraine’s robust adoption of digital assets is a clear illustration of this dynamic. In the early stages of the war, the country received over $212 illion worth of crypto donations, alongside capital generated from the sale of non-fungible tokens (NFTs) to support humanitarian aid, and has used the revenue prominently for remittances by its expatriate population. 

In this case, the decentralised nature of crypto funds allowed digital currencies to be traded efficiently under war conditions, supporting pro-Ukrainian war efforts.

However, it’s important to consider that when businesses start to operate across multiple rails, having suitable regulatory structures is important. It’s critical to have regulation that unites the need for stability with embracing innovation, enabling compatibility between payment systems. This is where international financial centres (IFCs) – jurisdictions that support cross-border finance and investment- play a crucial role.

IFCs support the demand for digital assets 

IFCs, the likes of the British Virgin Islands, are already a critical part of international finance by supporting cross-border activity. By nature, IFCs enable capital to move between jurisdictions in a way that is adaptable to regulatory changes and market developments, supporting global commerce.  

When financial systems are strained by geopolitical uncertainty, businesses need greater flexibility in how capital is moved across borders. IFCs help to reduce fragmentation and maintain continuity by enabling capital to move across jurisdictions, often moving faster than governments when it comes to responding to the needs of multinational businesses. 

Regulation will shape the outcome

As the digital assets realm matures and supplements the traditional rails of cross-border payments and trade, demand for high-quality regulation, designed to protect all parties, becomes vital. 

Jurisdictions that provide regulatory clarity and strong oversight are more likely to attract responsible digital asset businesses and institutional investment. Firms and investors need confidence that markets operate within transparent rules and stable legal systems. 

For example, in the British Virgin Islands (BVI), the Virtual Assets Service Providers Act (VASP Act) 2022 does exactly this. It provides regulatory clarity, mandating registration and compliance, while simultaneously aligning with international guidelines, offering a stable foundation for growth, and remaining aligned with the International Financial Action Task Force (FATF) standards.

The IFCs that combine innovation with credible governance are likely to play a larger role in shaping the next generation of financial networks.

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While the news are dominated by an emphasis on the scale of market volatility, a more subtle, longer-term, and more fundamental shift is also occurring. 

How capital moves across borders is changing, and new infrastructure is emerging to meet the changing demands of global businesses, financial institutions, and individuals. As a result, digital assets are emerging as additional pathways to moving capital. 

As the role of digital assets grows in global financial systems, so will the role of IFCs to provide the important frameworks needed to operate amid global volatility.