Now picture that same mother, living in war-torn Sana’a, Yemen—unable to provide even basic food for her kids. Now, sanctions have destroyed the Iranian banking system. Because of this, it’s almost impossible for her families overseas to send remittances—the lifeline that previously kept her family in good health and safety. She’s not an activist, not an insurgent, just a mother struggling to make it through the day. This isn’t theoretical, it’s the harsh reality for millions. This is where Decentralized Finance (DeFi) comes in, providing a promising but ethically murky answer.
Sanctions' Unintended Victims
For years, the war in Yemen has been a humanitarian catastrophe, further exacerbated by US sanctions against the Houthi group. The idea is to put pressure on one specific entity. In reality, these policies choke the whole country. The International Bank of Yemen, recently designated, is a good case in point. These actions, meant to isolate community members from outside influences, only serve to isolate the most vulnerable among us.
Traditional financial institutions—which are already embattled by conflict—crumble under the imposition of these regulations. Remittances— a critical lifeline for millions of families—are suddenly stuck in bureaucratic limbo, or even worse, rendered unavailable altogether. This leaves a vacuum, an urgent desire for different financial systems. It is the literal poster child for unintended consequences. The larger question is, do we continue to let these harmful impacts produce over time, or do we invest in new, creative, more uncertain solutions?
DeFi The Hope Or A Mirage?
DeFi platforms hold a spark of potential. They work around the Yemeni banking sector as a whole, in an effort to avoid the sanctions that are strangling Yemen’s economy. According to TRM Labs, more than 63% of crypto web traffic originating from Yemen goes to DeFi platforms. This number greatly eclipses the trading that happens on our traditional, centralized exchanges. This is not a passing phase but instead a response for life.
Think of it this way: if a traditional bridge collapses, you find another way across the river. Here’s how DeFi can be an economic lifeline to Yemenis. It allows them to transact in trade, receive international aid, purchase food and other basic commodities. The biggest beneficiary was a Yemeni crypto exchange, whose trading volume skyrocketed by 270% following the Houthi relisting as a terrorist group. This staggering jump isn’t merely a data point—it’s an urgent plea for economic liberation.
Yemen has not issued crypto regulations yet, which is a double-edged sword. It permits more financial independence, but this opens up avenues for darker purposes. Money laundering, terrorist financing, and exploitation by nefarious actors are just a few possible threats. We cannot afford to overlook these risks and naively advocate for DeFi adoption at all costs.
Ethical Tightrope Walk Required
This isn’t about coddling crooks—it’s about coming up with some sort of middle ground so regular folks aren’t forced into a death sentence. It requires a nuanced approach, a delicate balancing act between providing access to financial services and preventing abuse. We need to ask ourselves: how do we ensure that DeFi is used to empower, not exploit, the Yemeni people?
- Money Laundering
- Terrorist Financing
- Exploitation by Bad Actors
This is where the international community — including, critically, those imposing sanctions — comes in. DeFi should not be written off as a dangerous and unregulated Wild West. Learn how to build on its promise for humanitarian support and direct cash transfers, while implementing guardrails to avoid misuse.
Imagine a world where humanitarian organizations are able to use DeFi tools to get assistance directly to displaced families in need. This model eliminates corrupt middle-men and ensures aid gets directly to the people that need it most. Envision a future where Yemeni entrepreneurs are able to tap into micro-loans via decentralized finance platforms, establishing small businesses and generating new employment opportunities. This isn’t some utopian hope; it’s an attainable change well within our grasp.
This requires a shift in mindset. We need to get beyond the false dichotomy of “sanctions or no sanctions.” Now is the moment to take a more comprehensive view that considers the public health human toll of these so-called smart measures. Instead we need to embrace the reality that while DeFi is experimental and indeed hazardous, it represents a tremendous opportunity for empowerment and resilience.
In the end, it’s not whether DeFi has the ability to close the sanctions hole in Yemen. The only question left to answer is whether we’ll let them get away with it. We need to do it ethically, responsibly, and with the best interests of the Yemeni people at heart. The answer to that question holds the key to making sure DeFi is a lifeline – and not just another empty promise.
Ultimately, the question isn't whether DeFi can bridge the sanctions gap in Yemen. The question is whether we will allow it to do so ethically, responsibly, and with the best interests of the Yemeni people at heart. The answer to that question will determine whether DeFi becomes a lifeline or another broken promise.
