Demand for USDT in India has surged to a record 8.5%: what lies behind the anomalous premium
On June 29, 2026, the Indian stablecoin market showed an anomaly: the premium on USDT on local exchanges reached 8.5%. This is almost double the standard range of 3–4% typically recorded on the country's platforms. Over the weekend, USDT traded at 102.88 Indian rupees, with the interbank dollar rate at 94.65 rupees.
Reason — Financial Police Raids
The sharp spike in the spread is directly linked to actions by India's Enforcement Directorate (ED). Law enforcement conducted searches at six offices in Bangalore, affecting five crypto payment companies. According to the ED, these firms facilitated illegal cross-border transfers using virtual digital assets.
How the Scheme Worked
The investigation claims that non-residents of India used USDT as an alternative to bank transfers. Rupees were deposited into accounts of local companies, converted into stablecoins, and then sold on Indian exchanges. This way, participants bypassed the country's financial regulator requirements. The total volume of transactions mentioned in the ED's statement exceeds 25 billion rupees (about $300 million).
Market Reacted Instantly
This model operated for about two years, attracting users with speed, low fees, and the ability to get more funds due to a persistent premium. However, after the ED's official statement, market makers and liquidity providers sharply reduced their purchases of USDT abroad. This led to an even tighter supply squeeze in the domestic market and, consequently, a record expansion of the spread.
My professional view: This case is a classic example of how regulatory pressure in developing countries creates an artificial liquidity shortage. The Indian USDT market remains extremely vulnerable to such shocks, and until the ED clarifies its stance on stablecoins, the premium may stay elevated. I recall a similar situation in Africa in January this year, where spreads during stablecoin-to-fiat conversion also reached record levels.