Home / Business and Economy / Stablecoin premium vanishes, hurting money changers
Stablecoin premium vanishes, hurting money changers
8 Dec
Summary
- Stablecoin premium collapse disrupted NRI money transfers from UAE, UK, USA.
- Money changers faced losses or delays due to vanished USDT premium.
- Arbitrage opportunity for faster, better-rate remittances is now halted.
A novel remittance strategy employing stablecoins for moving NRI funds from the UAE, UK, and USA to India has been severely impacted by recent market turbulence. The essential premium that USDT (a stablecoin pegged to the US dollar) typically commands over the dollar in India has vanished, disrupting the operations of money changers. These licensed dealers previously attracted NRI clients with superior exchange rates and faster transfers compared to traditional banking channels.
This arbitrage model relied on buying USDT overseas and selling it in India at a premium, which allowed money changers to offer better rates to clients and still profit. For instance, a USDT bought with NRI money in Dubai could be sold in India for a higher rupee amount. This extra profit was split with the client, and the remaining funds were transferred to relatives in India, either via bank accounts or cash handlers.
However, the recent market volatility has seen this premium disappear, leaving some operators with funds stuck in the system or facing significant losses. Complaints have emerged regarding long delays in remittances, with some money changers absorbing losses hoping the market will stabilize. The situation has brought this efficient money transfer route to an abrupt halt.
