Migrant workers from South Asia employed in Gulf countries are increasingly turning to stablecoins as an alternative channel for sending money home amid concerns that the US-Iran conflict could disrupt traditional remittance systems linked to the dollar, according to a report by SCMP.

Industry analysts said fears surrounding sanctions, financial restrictions and disruptions in the Strait of Hormuz have pushed some workers toward digital tokens such as USDT and USDC for cross-border transfers.

Millions of workers from Pakistan, India, Bangladesh and Sri Lanka rely on Gulf economies for employment, while remittances remain a major source of foreign exchange for several South Asian countries.

According to the State Bank of Pakistan, workers’ remittances stood at $3.54 billion in April 2026, showing an 11% increase compared to the same month last year, although inflows declined 8% on a monthly basis from March. During the first 10 months of FY26, total remittances reached $33.86 billion, up 8.5% year-on-year.

Analysts, however, pointed to growing dependence on Gulf economies for remittance inflows. Data showed that Saudi Arabia, the UAE and other Gulf Cooperation Council countries collectively accounted for more than $18 billion during 10MFY26, representing more than half of Pakistan’s total remittance receipts.

Saudi Arabia remained the largest source with inflows of $7.93 billion, followed by the UAE at $7 billion.

Experts warned that the concentration of remittances from a single region leaves Pakistan vulnerable to external disruptions, particularly as geopolitical tensions in the Gulf continue to rise amid fears of wider regional conflict.

According to the Global Settlement Network, remittances account for between 3% and 5% of GDP in multiple emerging economies, while the share reaches around 10% in Nepal.

Singapore-based blockchain adviser Anndy Lian said there had been a gradual shift among South Asian migrant workers toward stablecoins following the Iran conflict, although traditional banking and licensed exchange operators still dominate remittance flows.

Lian estimated that stablecoins currently account for around 3% to 4% of remittances sent by Gulf-based workers.

He said one reason for the growing interest in USDT was that it often trades at a premium of around 4% to 5% in markets such as India compared to official dollar exchange rates, allowing recipients to obtain higher value on transfers.

The report said concerns over remittance channels intensified after the United States warned against toll payments to Iran for ship passage through the Strait of Hormuz, which has faced disruptions during the conflict.

According to Raj Kapoor, president of the India Blockchain Alliance, the conflict has also affected treasury operations and financial activities of global banks operating in the Gulf region, creating additional pressure on conventional remittance systems.

Several Gulf states, including the UAE, Bahrain and Saudi Arabia, have introduced regulatory frameworks in recent years allowing stablecoins to operate within parts of their financial systems.

Ryan Kirkley, co-founder and co-chief executive officer of Global Settlement Network, said the conflict had affected not only energy markets and dollar liquidity but also remittance flows relied upon by millions of migrant workers and their families.

India received around $125 billion in remittances last year, with Gulf countries contributing roughly one-third of the total, according to the report.