- USDT premium in India crossed 8.5% as domestic stablecoin supply tightened.
- ED scrutiny slowed USDT inflows, reducing crypto liquidity across India markets.
- Regulatory uncertainty is driving higher stablecoin premiums across India now.
The premium on USDT, the world’s largest stablecoin, has climbed above 8.5% in India as tightening domestic supply and increased regulatory scrutiny reshape the country’s crypto market.
USDT, issued by Tether and pegged to the US dollar, typically trades at a premium in India because local demand exceeds supply. While the premium usually stays around 3% to 4%, it has widened sharply over the past week.
On Saturday, USDT was quoted at ₹102.88, compared with the rupee’s closing exchange rate of ₹94.65 against the US dollar in the interbank forex market on Friday.
Why The Premium Is Rising
Market participants attribute the jump to a decline in the supply of USDT entering India after recent action by the Enforcement Directorate against entities involved in crypto-based cross-border money transfers.
For the past two years, many overseas Indians had increasingly used USDT instead of conventional banking channels to send money home. The route was often faster, cheaper and, because of the premium, generated more rupees for recipients than traditional dollar remittances.
However, the ED has intensified its scrutiny of such transactions under the Foreign Exchange Management Act (FEMA) and the Prevention of Money Laundering Act (PMLA). The agency reportedly believes that cross-border crypto transfers may violate FEMA even if the underlying funds are legitimate.
As a result, market participants say inflows of USDT have slowed considerably, creating a shortage in the domestic market.
Related: Why July 2’s RBI Meeting Could Define India’s Crypto Path?
Regulatory Uncertainty Adds To Pressure
The supply squeeze has also been reinforced by reduced activity from crypto market makers and over-the-counter liquidity providers, many of whom have become more cautious following the ED’s recent investigation into alleged virtual digital asset-based money transfers worth around ₹2,500 crore.
Legal experts say the higher premium also reflects growing regulatory uncertainty and added that Indian exchanges have historically traded many digital assets above global prices, but the recent increase suggests traders are now also pricing in regulatory risk as authorities step up scrutiny without a settled legal framework.
Policy Debate Gains Momentum
The latest developments come as policymakers continue to examine India’s approach towards digital assets.
The Parliamentary Standing Committee on Finance is scheduled to meet representatives from the Reserve Bank of India and the Institute of Chartered Accountants of India on July 2 to discuss the country’s regulatory roadmap for virtual digital assets.
Related: Bank of Thailand Says the Thai Baht Stablecoin Guideline Is in Its Final Stage
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