Key Highlights
- Some Indians abroad are using stablecoins like USDT instead of banks to send money home.
- The USDT premium in India (4–5%) has opened an arbitrage opportunity for remitters.
- The RBI is developing a digital rupee (CBDC) while keeping a cautious stance on private cryptos.
- Private firms and regulators are preparing for a more structured framework for digital assets in India.
Some Indians working overseas have started sending money home in a new way. In the past few months, a small part of these remittances hasn’t come through banks or money transfer services, but through stablecoins — digital coins that match the value of real currencies such as the US dollar.
Though the volume is still small, this new method is catching the eye of money changers and market watchers. The reason is straightforward: USDT (Tether), the most popular stablecoin, is selling in India at a higher price than the regular dollar exchange rate, creating a small but tempting profit margin.
The premium that created a new route
USDT, issued by a company called Tether, is pegged to the US dollar on a one-to-one basis. In India, however, it trades about 4–5% higher than the official dollar exchange rate. While one US dollar currently converts to roughly ₹88.6, one USDT is selling for about ₹93.
This price gap has opened up a small but clear profit opportunity. For example, if someone sends $1,000 home through a bank, their family would get about ₹88,600. But if that same amount is turned into USDT abroad and then sold in India, it would bring in roughly ₹93,150. That extra few thousand rupees has quietly made stablecoins an attractive new way to send money home.
How the crypto remittance works
According to people familiar with such transactions, a money changer abroad often buys USDT in places like Dubai or New Jersey instead of wiring money through banks. The tokens are then transferred to a digital wallet owned by his counterpart in India.
The Indian money changer sells the stablecoins to local crypto buyers, often through peer-to-peer (P2P) deals on Telegram or informal crypto platforms. Some avoid the 1% tax deducted at source (TDS), while others sell on domestic crypto exchanges, pay the tax, and still make a small profit.
The extra earnings are usually shared between the operator and the customer. The process is quicker and cheaper than traditional remittances, but it operates outside the formal financial system, making it technically unregulated.
Small but growing
So far, the scale remains modest. Market estimates suggest that around 3-4% of total remittances may have shifted from banks to stablecoins. A few money transfer firms are believed to have raised the issue informally with officials at the Reserve Bank of India (RBI).
“Money transmitters in a few jurisdictions are now allowed to handle remittance in fiat currency as well as in cryptos, including stablecoins. For example, a company having a Money Transmission License in the US can accept USD, convert it into stablecoin and send it to the digital wallet of the beneficiary in India,” explained Purushottam Anand, advocate and founder of Crypto Legal.
Rising demand for USDT in India
Industry watchers say the demand for USDT in India has been growing steadily. Traders use stablecoins to hedge against volatility by converting their crypto holdings into USDT when markets turn uncertain.
Some people are also using stablecoins to make payments on offshore gaming and betting websites. This steady usage has kept the demand for USDT strong in India, which in turn helps maintain its higher price compared to the US dollar. Because of this continued demand, more stablecoins are flowing into India from overseas.
RBI’s position and the push for CBDCs
The Reserve Bank of India (RBI) is still cautious about private cryptocurrencies. Even though it recently met with members of India’s crypto community for the first time, the bank’s position hasn’t changed.
The RBI is creating its own digital rupee (CBDC), a government-backed currency fully controlled by the central bank. In contrast, private stablecoins like USDT or USDC are issued by companies.
The UAE, where many Indians work, is also planning a Dirham-based CBDC. Once both are launched, the two countries could link their systems, making it easier and legal for Indians in the Gulf to send money home.
On October 4, India’s Finance Minister urged other countries to start preparing for the growing use of stablecoins and called on global leaders to set clear rules for digital currencies. The statement showed that India understands how quickly digital assets are becoming a major part of the global financial system.
Private sector experiments
As the RBI concentrates on developing the digital rupee, some private companies have started experimenting with their own versions of digital currency. A Bengaluru-based firm recently announced plans to create an INR-backed stablecoin. If listed on foreign exchanges, it could let Indians abroad or foreign importers buy the token and send it directly to India.
This could make money transfers faster and cheaper, though it’s likely to stay under close regulatory watch. Sources also say some service export payments, which aren’t tracked on India’s Export Data Processing and Monitoring System (EDPMS) system, are already happening in stablecoins.
Regulators start tightening oversight
Regulators are also becoming more alert to digital investment products. The Securities and Exchange Board of India (SEBI) recently warned investors about digital gold, which has been operating in a regulatory grey area.
Responding to this, Aishwary Gupta, Global Head of Payments at Polygon Labs, shared his view with Gopal, senior analyst at The Crypto Times.
“SEBI’s caution on digital gold isn’t random, it’s regulation by hindsight. For nearly a decade, digital gold operated in a grey zone: neither a security, nor a deposit, nor a derivative. Regulators allowed it to scale under the radar because it looked safe and inclusive.
Now, with over ₹10,000 crore in circulation, hybrid products blurring the lines between gold, SIPs, and tokens, and potential custody mismatches emerging, SEBI’s move feels more like pre-emptive containment than a warning. India’s clearly preparing for a regulated framework for tokenized assets and shutting down the grey zone is the first step toward that.”
Gupta’s comment reflects the growing consensus that India is preparing for a regulated framework for all kinds of digital and tokenized assets, including stablecoins.
What lies ahead
For now, the use of stablecoins in remittances remains small and largely unmonitored. Banks are not yet concerned, but the regulator is aware of the potential risks and opportunities.
If the RBI’s digital rupee becomes widely available and interoperable with foreign CBDCs, it could eventually replace both traditional and crypto-based remittance routes. Until then, the quiet shift toward stablecoins will continue, as senders and money changers look for faster and slightly more rewarding ways to move money home.
Also Read: Tier-2 India Takes the Lead in the Country’s Crypto Revolution
