The premium on Tether's USDT stablecoin jumped above 8.5% in India following an Enforcement Directorate crackdown on crypto payment firms, The Economic Times reported on June 29. The ED cracked down early this month on five Bengaluru-based firms under the Foreign Exchange Management Act, claiming they facilitated unauthorized cross-border transfers worth more than $265 million via virtual digital assets. Non-resident Indians had been using USDT as a replacement for bank wire transfers for roughly two years, bypassing documentation and authorization norms under FEMA and the Prevention of Money Laundering Act, the agency stated.
Tether's USDT is pegged 1:1 to the U.S. dollar and maintains a market cap of $184.88 billion, accounting for 59% of the total stablecoin segment as per DeFiLlama. The USDT premium represents the difference between the market price of USDT on an exchange and its $1 peg — the extra amount Indian users pay for 1 USDT above what $1 costs through banks. The premium surges when local demand outstrips supply.
ED Crackdown Targets Five Bengaluru Firms
India's Enforcement Directorate cracked down early this month on five crypto payment firms based in Bengaluru under the Foreign Exchange Management Act, as per the report by The Economic Times. The ED claimed that these firms facilitated unauthorized cross-border transfers worth more than $265 million via virtual digital assets.
Non-resident Indians have been using USDT as a replacement for bank wire transfers to families for roughly two years, the agency claimed. USDT is cheaper, faster, and converts into more rupees than wired USD remittances, but the process bypasses the documentation and authorization norms governing official remittance channels under FEMA and PMLA, the ED stated.
Following the crackdown, market makers and liquidity providers that supply USDT tokens from abroad to Indian crypto platforms quickly retreated from USDT purchases abroad. As supply tightened, the USDT premium surged more than 8.5% above its dollar value on Indian crypto platforms. USDT traded around INR 102.88 on June 26 against the USD-INR pair closing at 94.65 in the Indian forex market a day earlier, the ET report said. Prior to the crackdown, the USDT premium used to remain within the 3-4% range.
USDT Premium Exceeds 8% at Press Time
At press time, 1 USD could be exchanged for INR 94.54. At the same moment, 1 USDT could be exchanged for INR 102.31 on the popular Indian crypto exchange CoinDCX. The USDT premium still stood above 8% in India at the time of writing.
FAQ
What did the Enforcement Directorate do early this month in India?
The Enforcement Directorate cracked down early this month on five crypto payment firms based in Bengaluru under the Foreign Exchange Management Act, claiming they facilitated unauthorized cross-border transfers worth more than $265 million via virtual digital assets.
Why did the USDT premium jump above 8.5% in India?
The USDT premium jumped above 8.5% following the ED crackdown, as market makers and liquidity providers retreated from USDT purchases abroad, tightening supply on Indian crypto platforms. USDT traded around INR 102.88 on June 26 against the USD-INR pair closing at 94.65 a day earlier.
