India’s USDT premium spikes as regulatory crackdown chills supply

Tether’s stablecoin traded at 102.88 Indian rupees on local platforms over the weekend, significantly outstripping the USD-INR interbank rate of 94.65. This widening gap follows raids on six Bengaluru premises on June 17, where authorities investigated five payment firms for allegedly moving over 2,500 crore rupees—approximately $265 million—using virtual assets to bypass standard banking channels. Investigators claim non-resident Indians utilized the USDT model to circumvent the Foreign Exchange Management Act and anti-money laundering protocols, favoring the digital route for its speed and cost-efficiency.

Market makers and liquidity providers have since pulled back from overseas purchasing, further restricting domestic supply. The regulatory environment remains volatile, with the Parliamentary Standing Committee on Finance set to meet with the Reserve Bank of India on July 2. This session follows an aggressive push by the Income Tax Department, which recently issued 44,000 notices targeting 888 crore rupees in undisclosed digital asset income. Despite these enforcement efforts, India maintained its top ranking in global crypto adoption throughout 2025, as regional transaction volumes in South Asia surged to $300 billion.