Authored by Shaurya Malwa via CoinDesk.com,
Raids on crypto payment firms in Bengaluru disrupted the pipeline that feeds dollar-pegged USDT to Indian platforms, pushing its local price more than 8.5% above the dollar, roughly double the usual gap.
The price of Tether's USDT, the largest dollar-pegged stablecoin, has climbed to more than 8.5% above its dollar value on Indian platforms after a government crackdown on crypto payment firms choked off the token's supply into the country.
USDT traded 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%.
That spread, known as the USDT premium, is 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 supply of tokens.
Local publication ET said the squeeze followed action by the Enforcement Directorate (ED), India's financial-crime agency, which searched six premises in Bengaluru on June 17 under the Foreign Exchange Management Act, the law governing cross-border money flows.
The agency is targeting five crypto payment firms it alleges moved more than $265 million in unauthorized cross-border transfers using digital assets.
The ED alleges the firms ran what amounted to 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.
The premium spiked because the crackdown hit supply directly.
After the ED announced its action, market makers and liquidity providers, the firms that source tokens from abroad to sell on local platforms, pulled back on buying USDT overseas, tightening the domestic pool just as the off-ramps feeding it came under pressure. An off-ramp is the route for turning crypto back into local cash.
As such, prominent exchange Coinbase launched direct rupee rails in India last month, easing some reliance on peer-to-peer trades, though the ED's action targets the off-ramp infrastructure that drives the premium.
[ZH: These actions by Indian officials come as their currency collapses and various capital controls - on bullion most recently - are enacted... see here, here, and here.]
Tyler Durden Mon, 06/29/2026 - 12:40