The premium has risen over the weekend to more than double its typical range due to liquidity disruptions in stablecoin supply after Enforcement Directorate raids on crypto remittance firms.

The elevated premium reflects strong local demand for USDT driven by faster and cheaper transfers via stablecoins compared to traditional remittance routes, coupled with regulatory actions restricting token supply locally.

A supply crunch in India pushed the local USDT premium above 8.5%, with USDT trading around INR 102.88 while the USD/INR rate hovered near INR 94.65, signaling a higher rupee-based cost to access USDT despite a globally stable peg.

Regulatory scrutiny in India is intensifying, with a Parliamentary Standing Committee on Finance set to discuss virtual digital asset regulation on July 2 in a session involving the RBI and ICAI; the RBI has long warned about risks linked to stablecoins and digital assets.

The July 2 parliamentary discussion on digital assets, featuring RBI officials and ICAI, is expected to shape future stablecoin liquidity and regulatory direction, potentially improving liquidity if clarity is provided.

The July 2 meeting will cover virtual digital assets and remittance rails, potentially clarifying on/off-ramp boundaries and reporting requirements, or, if compliant pathways aren’t established, tightening enforcement.

Analysts say clearer regulatory guidance could spur market makers to resume normal stablecoin activity, while further enforcement without guidance could prolong the supply squeeze and keep premiums elevated.

Author: Minseung Kang, blockchain journalist for Blooming Bit.

Enforcement actions by India's Enforcement Directorate disrupted crypto-related remittance networks and scrutinized roughly ₹2,500 crore ($265 million) in related transactions, prompting cautious behavior from liquidity providers and market makers on Indian exchanges.

India remains a major retail crypto market, with demand supported by P2P and domestic exchanges, while tighter AML/tax rules and ongoing regulatory scrutiny shape the cost and availability of compliant rails.

Regulatory uncertainty is a key driver of the premium, as traders price in potential enforcement risk and tighter oversight affecting liquidity providers and institutional participants.

Industry notes broader regulatory and adoption trends: the FIU’s increased scrutiny of crypto OTC deals, Coinbase launching INR rails in India, and reports that illicit virtual asset transaction volume largely involves stablecoins, underscoring ongoing regulatory attention to stablecoin usage and remittance channels.