Tether (USDT) traded at a sharp premium in India after Enforcement Directorate (ED) raids on crypto remittance firms tightened local supply. The stablecoin changed hands around 102.88 rupees on domestic platforms over the weekend, versus an interbank USD/INR close of 94.65, pushing the gap well beyond the typical 3% to 4% range.
The spike follows searches at six premises under the Foreign Exchange Management Act, targeting five entities accused of enabling more than 2,500 crore rupees ($265 million) in unauthorized cross-border transfers using digital assets. Officials said non-resident Indians used USDT as an alternative channel to move money abroad.
How the remittance model worked
Authorities said the firms accepted rupee deposits, converted them into stablecoins, and transferred the funds overseas, where they were sold locally. This process bypassed documentation required under FEMA and the Prevention of Money Laundering Act. The model reportedly operated for about two years, attracting users with faster settlement and favorable conversion compared with bank routes.
Supply squeeze deepens premium
Market makers and liquidity providers have curtailed purchases of USDT from overseas sources since the raids, tightening supply further and keeping the premium elevated. For traders, the higher entry cost for a dollar-pegged asset raises trading expenses and compresses margins, especially for strategies reliant on stable pricing.
Regulatory scrutiny intensifies
The developments come as policymakers weigh tighter oversight of virtual digital assets. A parliamentary panel is scheduled to meet the Reserve Bank of India (RBI) and the Institute of Chartered Accountants of India on July 2 to examine policy options. The RBI has consistently taken a cautious stance, citing financial stability and compliance risks.
Global context and compliance pressure
A March 2026 report by the Financial Action Task Force found that 84% of the $154 billion in illicit virtual asset activity in 2025 involved stablecoins, pointing to their liquidity and portability. This backdrop supports stricter enforcement and monitoring by domestic agencies.
Adoption remains strong despite curbs
India continues to lead global crypto adoption, ranking first for a third straight year in 2025. South Asia recorded an 80% year-on-year increase in transaction volume to about $300 billion between January and July, driven by retail use and cross-border flows.
New rails and oversight measures
Separately, new banking rails for direct rupee transfers aim to reduce reliance on peer-to-peer stablecoin trades. However, enforcement actions have disrupted off-ramp networks that support domestic USDT liquidity. The Financial Intelligence Unit has expanded its review of over-the-counter activity, directing platforms to retain records from January 2026 and flag transactions above $10,000.
Concerned about India’s rising stablecoin dynamics? Learn how regional demand, regulation, and liquidity are reshaping USDT pricing and cross-border flows.
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