The USDT premium in India has surged to 8.5%: what is behind the sharp spike
On June 29, an anomalous spike in the premium for the USDT stablecoin was recorded on the Indian market — it reached 8.5%, almost double the usual spread of 3–4%. Over the weekend, USDT was trading on local platforms at 102.88 Indian rupees, with the interbank exchange rate against the dollar at 94.65 rupees. This trend indicates a serious imbalance between supply and demand.
The reason for such a sharp increase is the active actions of India's Enforcement Directorate (ED). Law enforcement conducted raids on six premises in Bangalore, affecting five crypto payment companies. According to the ED, these firms facilitated unauthorized cross-border transfers using virtual digital assets. In particular, non-residents of India used USDT as an alternative to bank transfers: rupees were credited to company accounts, converted into stablecoins, and then sold on local exchanges, bypassing the requirements of the financial regulator.
The total volume of transactions mentioned in the ED's statement exceeds 25 billion rupees (about $300 million). This scheme operated for about two years, attracting users with speed, low transfer costs, and the ability to obtain more funds due to a persistent premium. However, after the ED's statement, market makers and liquidity providers sharply reduced their purchases of USDT abroad, further tightening supply on the domestic market and widening the spread.
This case is reminiscent of the situation in Africa, which in January became the leader in the size of spreads when converting stablecoins into fiat. In India, we see how regulatory pressure instantly changes market structure: the withdrawal of market makers creates a shortage, and the premium soars to extreme levels. If the ED continues its pressure, the Indian USDT market could face even more serious distortions, making stablecoins less accessible to retail users.