Can stablecoins replace letters of credit in international trade finance? Letters of credit ensure trust, guaranteeing payment for goods across borders. However, they are costly, slow, and paper-intensive. Stablecoins, digital currencies pegged to stable assets, offer a faster, cheaper alternative. They enable near-instant, transparent transactions on blockchain, reducing intermediaries and fraud risks. Smart contracts can automate payment terms, mimicking letters of credit without cumbersome processes. Yet, stablecoins face challenges: regulatory uncertainty, limited adoption, and volatility risks in some designs. While they promise efficiency, banks and traders still rely on the established trust of letters of credit. Stablecoins could disrupt trade finance, but widespread adoption requires clearer regulations and broader acceptance to fully replace traditional systems.