USDT premium in India surges above 8.5% due to tight stablecoin market

In India, the availability of USDT is becoming increasingly scarce, leading to a sharp rise in the local stablecoin premium. While this premium normally sits somewhere between 3% and 4%, it has now surged past 8.5%. Last Saturday, USDT was trading on the Indian market at ₹102.88, while the exchange rate of the US dollar against the Indian rupee (USD/INR) closed at 94.65 on Friday. The Economic Times reports.

Government action puts pressure on USDT supply

The trigger for the sudden scarcity is an action by India’s Enforcement Directorate, the investigative agency that tackles financial crimes. The agency is probing no less than ₹250 billion in remittances through virtual digital assets, which is clearly curbing the inflow of USDT into the country. Traders and parties that normally supply stablecoins are becoming more cautious, causing supply to fall and the price to rise.

This kind of government intervention has a direct impact on market dynamics. When the supply of a widely used stablecoin like USDT abruptly declines, a scarcity arises that immediately translates into higher premiums. This is now clearly visible on the Indian market, where the gap between the local USDT price and the official exchange rate is historically wide.

Regulatory uncertainty amplifies risk premium

According to Purushottam Anand, founder of Crypto Legal, the rising premium is not solely due to physical scarcity. He argues that part of the upward pressure also stems from a risk premium that traders are pricing in because of growing regulatory uncertainty in India. As long as it remains unclear how strictly the government will further act, market participants are building in an extra buffer when trading stablecoins.

The situation in India is not an isolated one. Globally, governments are increasingly taking a stance against the use of crypto for cross-border payments, as is also visible in Europe where more than 230 MiCA licences have already been issued, but market diversity is under pressure. In India, a prolonged scarcity of USDT could have further implications for the accessibility of crypto for both individuals and companies that rely on stablecoins for international transactions.