India's USDT premium doubles to 8.5% as ED raids turn stablecoins into a scarce commodity 🇮🇳

Tether's USDT, the largest dollar-pegged stablecoin, traded at more than 8.5% above its dollar value on Indian crypto platforms this week after a government crackdown on crypto payment firms tightened the token's domestic supply. USDT changed hands around 102.88 rupees over the weekend against an official dollar-rupee rate of about 94.65, a gap that normally sits between 3% and 4%. The spread, known as the USDT premium, reflects the extra amount buyers in India pay for the stablecoin above what a dollar costs through banks, and it widens when local demand outstrips the available supply of tokens.

The squeeze followed action by India's Enforcement Directorate, which searched six premises in Bengaluru on June 17 under the Foreign Exchange Management Act, the law governing cross-border money flows, according to local publication ET. The agency is targeting five crypto payment firms it alleges moved more than $265 million in unauthorized cross-border transfers using digital assets. Investigators say the companies ran an informal remittance channel, with non-resident Indians using USDT in place of bank wires. Rupees were deposited into company accounts, converted into stablecoins, sent across borders and sold on Indian exchanges, the agency said, sidestepping the paperwork and approvals that formal remittance routes require under FEMA and India's anti-money-laundering law. The model had operated for about two years, drawing users because stablecoin transfers were faster and cheaper than bank routes and, thanks to the standing premium, converted into more rupees on the way in.

Market makers and liquidity providers pulled back from sourcing USDT from abroad after the ED announced its action, tightening the domestic pool just as the off-ramps feeding it came under pressure. India has not issued a formal ban on USDT trading, but the raids have disrupted the pipeline that connects overseas token reserves to Indian platforms, where retail and remittance demand for stablecoins has remained heavy for years. The Enforcement Directorate has not publicly named all five firms under scrutiny, and the case is ongoing as of June 29, 2026.