USDT Emerges as Dominant Force in India’s Evolving Illicit Financial Flows

A recent report from India's Directorate of Revenue Intelligence (DRI) reveals a significant and rapid transformation within the country's smuggling networks. Facing intensified crackdowns on traditional underground banking, these illicit trade operations are pivoting towards cryptocurrency, with a pronounced preference for stablecoins, particularly Tether (USDT). This shift marks a fundamental change in how proceeds from smuggling activities—especially gold and narcotics—are moved across borders. The traditional hawala system, which relied on trust and informal ledgers, is being supplanted by digital transactions that offer perceived anonymity and speed. Smugglers are now utilizing VPN-masked cryptocurrency wallets to instantly transfer value overseas, bypassing conventional financial monitoring systems. This adoption highlights the growing intersection of digital assets and shadow economies, presenting new challenges for regulatory and enforcement agencies. The move to USDT, a dollar-pegged stablecoin, provides these networks with the price stability necessary for large-scale transactions, avoiding the volatility associated with other cryptocurrencies. This development underscores the dual-edged nature of crypto innovation: while fostering financial inclusion and technological advancement, its features are also being co-opted to facilitate sophisticated, cross-border illicit finance. The DRI's findings signal a critical juncture for policymakers, emphasizing the urgent need for advanced blockchain analytics and international cooperation to track and disrupt these evolving financial flows. As of December 2025, this trend represents a concrete case study in how decentralized financial tools are reshaping global black markets, with USDT at the center of this new paradigm.

India's Smuggling Networks Shift to Crypto Payments Amid Crackdown

India’s illicit trade networks are rapidly adopting cryptocurrencies to facilitate gold and narcotics smuggling, according to a new report from the Directorate of Revenue Intelligence (DRI). Stablecoins like USDT have become the preferred payment method, replacing traditional hawala networks that once dominated underground financial flows.

Smugglers now leverage VPN-masked crypto wallets to move proceeds overseas instantly, leaving minimal paper trails. The DRI notes that once contraband is sold domestically, proceeds are converted to digital assets and transferred across borders—often before authorities can trace the transactions.

The agency is ramping up blockchain forensics and international cooperation to combat these crypto-enabled financial crimes. Unlike physical cash couriers or hawala intermediaries, cryptocurrency transactions provide smugglers with near-anonymous cross-border settlement—a challenge for enforcement agencies accustomed to tracking tangible money trails.

LayerZero Partners with Stable for Cross-Chain Stablecoin Expansion

LayerZero has been selected by Stable as its interoperability partner to facilitate multi-chain stablecoin movement. The collaboration, announced on December 5, positions LayerZero as the backbone for Stable's cross-chain asset transfers, enabling seamless mobility of assets like USDC.e, WETH, frxUSD, and USDT0 from launch.

The integration leverages LayerZero's OFT (Omnichain Fungible Token) standard and Stargate for swaps, ensuring 1:1 transfers with zero slippage. This setup aims to reduce friction and support high-volume liquidity across 150+ chains.

Enterprise adoption of LayerZero continues to gain momentum, with PayPal recently integrating the protocol to scale PYUSD transfers. The partnership with Stable further solidifies LayerZero's role as a critical infrastructure provider in the cross-chain ecosystem.

Polygon Exec Advocates for INR Stablecoin Amid India's Digital Payments Boom

India's payments landscape, dominated by UPI's 20 billion monthly transactions, may soon confront a new challenger: rupee-backed stablecoins. Polygon's Aishwary Gupta positions the technology not as competition but as complementary infrastructure for programmable money and cross-border flows.

The global stablecoin market, now exceeding $300 billion, remains dominated by USDT and USDC. Yet India's emergence as a top-10 stablecoin market despite regulatory hurdles suggests latent demand. 'We don't want stablecoins the wrong way,' Gupta cautions, deferring to regulators while acknowledging the technology's potential to unlock dollar liquidity without traditional banking rails.

Chainalysis data reveals India's quiet stablecoin adoption growth, particularly for remittances and DeFi access. The debate now centers on whether an INR stablecoin WOULD fill unmet needs or simply duplicate UPI's success in a more transparent, blockchain-native format.