India's USDT Premium Surges Above 8.5% After Crypto Remittance Crackdown

India’s USDT premium has surged to its highest level in years. According to the Economic Times, USDT traded at 102.88 Indian rupees on local platforms over the weekend. The official USD-INR exchange rate also closed at 94.65 rupees. This put the premium above 8.5%, which is more than double the normal 3% to 4% range seen in India.

This increase comes just after enforcement actions were taken against crypto remittance operators. This raised concerns that stablecoin supply in the country could become even tighter in the months ahead.

Crypto crackdown creates supply shortage

On June 17, India's Enforcement Directorate (ED) conducted searches at six locations in Bengaluru under the Foreign Exchange Management Act (FEMA). The agency targeted five crypto payment firms that allegedly facilitated more than 2,500 crore rupees, which is worth $265 million, in cross-border transfers using virtual digital assets.

They found that some non-resident Indians are using USDT as an alternative to make bank transfers when sending money home. The process was often faster and cheaper. It also generated more rupees because of the premium that USDT has in the country.

According to ED,  users deposited rupees into company accounts and then changed the funds into stablecoins. They allegedly transferred the coins across borders and then later sold the tokens on Indian exchanges. 

Regulators say that these kinds of transactions may bypass documentation and approval requirements under FEMA and anti-money laundering rules.

The crackdown reportedly disrupted a remittance model that had been operating for almost two years. Because of this, fewer USDT tokens are entering the country. This then created a supply shortage that is helping push prices higher.

There have also been reduced stablecoin purchases from overseas markets amid the ED's actions, which added more pressure to supply.

Why is the market watching so closely?

Recent reports tell us that India was the first globally in crypto adoption. South Asia also saw an 80% increase in crypto transaction volume, reaching $300 billion between January and July 2025.

Notably, all this comes at a time when crypto hacks and manipulation are at an all-time high. A March 2026 report from the Financial Action Task Force (FATF) found that stablecoins were responsible for 84% of the $154 billion in illicit virtual asset transaction volume seen in 2025.

The country’s Financial Intelligence Unit (FIU) has also boosted its scrutiny of crypto over-the-counter transactions. Reports say exchanges have been asked to preserve OTC trading records dating back to January 2026. They were also instructed to flag transactions over $10,000.

Regulatory uncertainty continues

India is still in talks about crypto’s place in its economy. A Parliamentary Standing Committee on Finance is set to meet with officials from the Reserve Bank of India (RBI) and the Institute of Chartered Accountants of India on July 2 to discuss how the country would regulate virtual digital assets.

The country has always maintained its cautious position on cryptocurrencies for many years. RBI officials have repeatedly warned about risks linked to digital assets and stablecoins.

According to Purushottam Anand, founder of Crypto Legal, crypto assets in the country usually trade above the global market prices. 

“Indian exchanges have long traded most of the VDAs at a premium to global rates. The recent uptick may, in part, reflect a risk premium that builds when regulatory clarity is lacking,” he said.

He also noted that when regulations are unclear, traders would most likely build additional risk into pricing. This is a major cause for premiums to widen.