SS #113 - India USDT Premium Doubles on Crackdown

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Good morning.

India's crackdown on crypto remittance firms backfired in the most predictable way, doubling the USDT premium to 8.5% and exposing just how deeply stablecoins have replaced formal banking channels for cross-border transfers, right as regulators prepare to debate the country's broader approach to digital assets.

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In Today's Edition:

• Headline: India USDT Premium Doubles on Crackdown

• Quick Bites: BNY and Circle Expand Partnership

• Yield of the Week: Clearstar USDC Reactor: 10.87% APY

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HEADLINE

State of play: India's USDT premium surged past 8.5%, more than double its normal range, after Enforcement Directorate raids on Bengaluru crypto remittance firms disrupted the stablecoin supply pipeline used to bypass formal cross-border transfer channels.

• USDT traded at 102.88 rupees on local platforms versus a 94.65 interbank rate, a spread well above the typical 3-4% range.

• ED raids targeted five crypto payment firms across six Bengaluru premises on June 17, alleging more than 2,500 crore rupees ($265M) in unauthorized cross-border transfers using USDT.

• The scheme operated for roughly two years, with non-resident Indians using USDT as a faster, cheaper substitute for bank wires that also yielded more rupees on conversion.

• Market makers pulled back on USDT purchases from abroad following the ED's statement, further tightening domestic supply.

• India's Parliamentary Standing Committee on Finance is set to meet with the RBI and ICAI on July 2 to discuss the country's regulatory path on virtual digital assets.

What’s Next: The Parliamentary Standing Committee on Finance meets with the RBI and ICAI on July 2 to discuss India's regulatory path on virtual digital assets, now shadowed by the ED's action.

Why it Matters: The crackdown exposes how deeply USDT embedded itself into India's informal remittance infrastructure, with a premium that made stablecoin transfers more profitable than legal bank channels for two years.

Our Take: An 8.5% premium is evidence India's capital controls created the arbitrage this scheme exploited. The ED is treating the symptom, not the cause; supply disruptions will widen the premium, not eliminate the demand.

QUICK BITES

• BIS says stablecoins fall short as money.

• BlackRock's Aladdin adds deeper support for Ethena's stablecoin products.

• India's USDT premium tops 8.5% as crackdown squeezes stablecoin supply.

• BNY and Circle expand partnership, adding mint and burn capabilities for USDC.

YIELD OF THE WEEK

Clearstar USDC Reactor: 10.87% APY

• The vault accepts USDC deposits and routes capital across efficient lending markets to maximize yield while monitoring on-chain risks via Hypernative, with ~$1.87M in total deposits and ~$195.1k in available liquidity.

• Capital is primarily deployed into sUSN/USDC (~$1.87M at 91.45% utilization), with a small allocation to liUSD-1w/USDC running at 94.60% utilization.

• Yield is generated from lending demand across diversified collateral markets, with the sUSN market driving the majority of returns at 13.74% APY, net of a 20% performance fee.

Re Ecosystem Vault: 10.09% APY

• The vault accepts USDC deposits and exclusively allocates capital to re.xyz ecosystem assets on Morpho, with ~$8.06M in total deposits and ~$1.3M in available liquidity.

• Capital is almost entirely deployed into PT-reUSD-10DEC2026/USDC (~$8.06M, 99.97% allocation, 93.00% utilization), with negligible exposure to reUSD/USDC and PT-reUSD-25JUN2026/USDC markets.

• Yield is generated from lending demand against re.xyz's reUSD collateral, with the PT-reUSD-10DEC2026 market driving the majority of returns at 11.27% APY, net of a 10% performance fee and 0% management fee.

RockawayX USDC Yield: 9.31% APY

• The vault accepts USDC deposits and serves borrowing demand from leveraged yield strategies, offering enhanced lending rates on Morpho, with ~$6.66M in total deposits and ~$2.97M in available liquidity.

• Capital is primarily deployed into PT-reUSD-10DEC2026/USDC (~$4.99M, 74.85% allocation, 93.00% utilization), with a secondary allocation to stUSDS/USDC (~$1.64M, 24.66% allocation, 90.07% utilization).

• Yield is generated from lending demand across leveraged collateral markets, with the PT-reUSD market driving the majority of returns at 11.27% APY, net of a 5% performance fee and 0% management fee.

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