The rupees were deposited into company accounts, converted into stablecoins, sent across borders and sold on Indian exchanges, the agency said, avoiding the paperwork and approvals that formal remittance routes require under FEMA and India’s anti-money laundering law.
The model had worked for about two years, attracting users because stablecoin transfers were faster and cheaper than bank routes and, thanks to the permanent premium, converted into more rupees along the way.
The premium skyrocketed because the repression directly affected supply. After the ED announced its action, market makers and liquidity providers – the companies that source tokens from abroad to sell on local platforms – stopped buying USDT overseas, tightening the domestic pool just as the off-ramps that fed it came under pressure. An exit ramp is the route to convert cryptocurrencies back into local cash.
As such, prominent exchange Coinbase launched direct rupee lanes in India last month, alleviating some reliance on peer-to-peer transactions, although the ED’s move points to the outbound infrastructure driving the premium.
