India’s USDT premium doubles as regulatory action tightens supply

India’s USDT premium has climbed to more than 8.5%, more than twice its usual level, after enforcement action against crypto remittance firms has disrupted the domestic supply of the stablecoin.

According to The Economic Times, Tether’s USDT traded at 102.88 Indian rupees on local crypto platforms over the weekend, while the USD-INR interbank rate closed at 94.65 rupees, creating a gap that is usually limited to around 3% to 4%.

The USDT premium moved above its normal range after the Enforcement Directorate raided six premises in Bengaluru on June 17 as part of an investigation under the Foreign Exchange Management Act. The agency alleged that five crypto payment firms enabled more than 2,500 crore rupees ($265 million) in unauthorized cross-border transfers using virtual digital assets.

Investigators alleged that non-resident Indians used USDT instead of conventional bank remittance channels. According to the agency, users deposited rupees into company accounts before the funds were converted into stablecoins, transferred overseas and later sold on Indian exchanges, allowing transactions to bypass documentation and authorization requirements under FEMA and the Prevention of Money Laundering Act.

The report said the model had operated for about two years because USDT transfers were faster, cheaper and, with the domestic premium, often generated more rupees than traditional dollar remittances. It added that market makers and liquidity providers also reduced overseas USDT purchases following the ED action, further tightening supply inside India.

Regulatory scrutiny expands

In the coming days, attention will turn to policy discussions as the Parliamentary Standing Committee on Finance is scheduled to meet the Reserve Bank of India and the Institute of Chartered Accountants of India on July 2 to discuss India’s approach to regulating virtual digital assets.

The RBI has continued to warn about the risks associated with cryptocurrencies and stablecoins, while the Financial Action Task Force said in its March 2026 report that stablecoins accounted for 84% of the $154 billion in illicit virtual asset transaction volume recorded during 2025 because of their liquidity and interoperability.

Regulators have also increased scrutiny across other parts of India’s crypto market. As previously reported by crypto.news, the Financial Intelligence Unit asked major crypto exchanges last month to preserve records of over-the-counter crypto transactions above $10,000 from January 2026 onward, with particular attention on beneficial ownership, source of funds and destination wallets.

Tax authorities have stepped up compliance checks as well. Earlier this month, India’s Income Tax Department said it had issued more than 44,000 notices after identifying over 888 crore rupees in undisclosed virtual digital asset income, supported by exchange data, tax deducted at source filings and investor returns.

Even as enforcement activity has intensified, India’s crypto market continues expanding. India ranked first in global crypto adoption for the third consecutive year in 2025, while South Asia recorded an 80% year on year increase in crypto transaction volume to about $300 billion between January and July 2025, according to TRM Labs.