Digital gold may come under RBI, Sebi oversight; physical backing proposed

New Delhi: The government has begun discussions on tightening the rules for digital gold, including requiring every unit to be backed by physical bullion and bringing the product under the joint oversight of the central bank and the securities market regulator, people familiar with the matter said.

The finance ministry has sought views from regulators, banks and other stakeholders and the broad consensus is that digital gold should be recognised as a security under the Securities Contracts (Regulation) Act, 1956, they said.

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The Securities and Exchange Board of India in 2025 had warned investors about dealing in digital gold. In its circular, the regulator stated that such products were different from Sebi-regulated gold products, as they were neither notified as securities nor regulated as commodity derivatives. “They operate entirely outside the purview of Sebi,” it said.

According to industry estimates, the digital gold industry manages around $3 billion of assets. The average ticket size is ₹100. “There is a consensus among all stakeholders that digital gold has gained acceptance among investors, and currently it is an unregulated segment which should be brought under the supervision of regulatory authorities,” said a bank executive, requesting anonymity. “We have submitted our recommendation to the government,” he added.

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Another executive said due to lack of regulatory supervision, some fly-by-night operators also infiltrated the segment, which led to concerns over investor protection and even money laundering. “Bringing it under the supervision of both RBI and Sebi will ensure that there is no regulatory arbitrage and also end uncertainty among all legal participants, including investors,” he added.The industry is also in favour of some regulatory supervision.

“The digital gold and silver ecosystem in India needs some regulatory oversight urgently considering its acceptance with consumers and the numbers of retail consumers who are onboarded with various players,” said Samit Guha, managing director of MMTC-PAMP, one of the major players in digital gold. Digital gold platforms this year formed a self-regulatory organisation, the Digital Precious Metals Assurance Council of India, which includes bullion providers like MMTC-PAMP and SafeGold and platforms such as PhonePe, BharatPe, MobiKwik, Gullak, Lenden Club and CRED.

Guha said the council is looking to standardise processes and procedures around buying, selling and storing of gold and other related processes to be the best in class so that customer interests are fully protected.