Rupees were deposited into corporate accounts, converted to stablecoins, sent across borders and sold on Indian exchanges, the agency said, bypassing the paperwork and approvals that formal money transfers require under FEMA and India’s anti-money laundering laws.
The model had been operating for about two years, attracting users because stablecoin transfers were faster and cheaper than bank routes and, thanks to the standing premium, converted to more rupees on the way in.
The premium increased because the suppression hit supply directly. After the ED announced its action, market makers and liquidity providers, the firms that source tokens from overseas to sell on local platforms, pulled back on buying USDT overseas, tightening the domestic pool, just as the off-ramps that fed it came under pressure. An off-ramp is the route to turn crypto back into local cash.
As such, prominent exchange Coinbase launched direct rupee rails in India last month, easing some reliance on peer-to-peer trading, although the ED’s action targets the off-ramp infrastructure that powers the premium.
