India's USDT premium tops 8.5% as crypto remittance crackdown squeezes stablecoin supply: report

India's USDT premium has climbed above 8.5%, more than double its typical range, after Enforcement Directorate raids on crypto remittance firms disrupted the stablecoin supply pipeline.

Tether's (USDT) stablecoin was trading at 102.88 Indian rupees on local platforms over the weekend, against a USD-INR interbank closing rate of 94.65 rupees, a spread that normally holds between 3% and 4%, local outlet The Economic Times reported.

The premium began widening after the ED conducted searches at six premises in Bengaluru on June 17 under the Foreign Exchange Management Act, targeting five crypto payment firms it alleges facilitated more than 2,500 crore rupees ($265 million) in unauthorized cross-border transfers using virtual digital assets.

Notably, the ED alleges that non-resident Indians used USDT as a substitute for bank wires.

Authorities claimed rupees were deposited into company accounts, converted to stablecoins, transferred across borders, and sold on Indian exchanges to bypass the documentation and authorization requirements that govern formal remittance channels under FEMA and the Prevention of Money Laundering Act.

The model had flourished for roughly two years, the report said, attracting users because USDT transfers were faster, cheaper, and — given the persistent premium — yielded more rupees on conversion than bank-routed dollar remittances.

Market makers and liquidity providers also pulled back on USDT purchases from abroad following the ED's statement, further tightening domestic supply, the report added.

Regulatory discussions

The ED's action arrives as the Parliamentary Standing Committee on Finance is scheduled to meet with the Reserve Bank of India and the Institute of Chartered Accountants of India on July 2 to discuss India's regulatory approach to virtual digital assets.

So far, the RBI has maintained a cautious stance on crypto, with the central bank's governor publicly warning of risks from stablecoins and cryptocurrencies.

The Financial Action Task Force, in its March 2026 report, attributed 84% of the $154 billion in illicit virtual asset transaction volume recorded in 2025 to stablecoins, citing their liquidity and interoperability as key factors in criminal misuse.

India ranked first in global crypto adoption for the third consecutive year in 2025, with South Asia recording an 80% year-on-year increase in crypto transaction volume to approximately $300 billion between January and July 2025, according to a TRM Labs report.

Coinbase separately launched direct INR rails in India last month, reducing some peer-to-peer reliance, though the ED's action targets the off-ramp infrastructure that underpins the stablecoin premium dynamic directly.

The FIU has also intensified scrutiny of crypto over-the-counter deals, with exchanges reportedly asked to preserve OTC records dating back to January 2026 and to flag transactions exceeding $10,000.