Tether (USDT) is trading at a severe premium in India, hitting 8.5% to 10% over the weekend. Local quotes for the stablecoin reached ₹102.88. That is far above the official interbank USD/INR closing rate of ₹94.65.
The severe price dislocation follows a major supply crunch. India’s Enforcement Directorate (ED) raided several Bengaluru-based crypto firms. Authorities accused the entities of facilitating unauthorized cross-border transfers. They flagged transactions totaling over ₹2,500 crore—roughly $265 million—for bypassing formal banking channels and violating the Foreign Exchange Management Act (FEMA).
Historically, India relies heavily on imported USDT due to a lack of domestic stablecoin issuance and large-scale mining operations. That dynamic usually creates a standard markup of 3% to 4%. But the sudden regulatory crackdown shattered normal liquidity channels.
For the past two years, Non-Resident Indians (NRIs) and overseas workers increasingly turned to USDT. It offered a faster, cheaper alternative to traditional banking for cross-border remittances. The ED’s intervention effectively severed those routes.
Now, market makers and liquidity providers are aggressively cutting back on overseas purchases out of regulatory fear. The disruption is a direct result of the enforcement actions, according to a report detailing the Bengaluru FEMA violations published Sunday.
Combined with the existing 30% crypto tax and 1% TDS that previously pushed high-frequency traders offshore, domestic exchanges face a severe liquidity freeze.
Why the ED Crackdown Threatens India’s P2P Crypto Markets
The sudden jump to a 10% premium marks a severe structural dislocation. It separates this event from routine market volatility. India’s aggressive oversight closely aligns with recent global warnings.
In March 2026, the Financial Action Task Force (FATF) reported that stablecoins accounted for 84% of the $154 billion in illicit virtual asset transaction volume recorded last year.
By targeting the primary off-ramps in Bengaluru, regulators are systematically squeezing the peer-to-peer (P2P) desks. As bid-ask spreads widen, execution risk for ordinary traders climbs exponentially.