According to IBJA, several digital gold companies are willing to come under a formal regulatory framework, whether through Sebi or another watchdog. The association believes regulation would:
- Assure customers that the gold backing their units is genuine and stored safely
- Reduce fears of mis-selling or unverifiable claims
- Bring product standards in line with other regulated gold instruments
Many digital gold platforms already claim to store gold with refiners accredited by the Bureau of Indian Standards (BIS) and NABL-approved laboratories. However, without oversight, investors must rely on platform disclosures.
What Sebi Has Said
Last week, Sebi cautioned that:
- Digital gold is not regulated as a security or as a commodity derivative
- It does not provide the same protections as gold ETFs, electronic gold receipts or exchange-traded derivatives
- Investors do not benefit from grievance redressal or risk frameworks meant for Sebi-regulated products
Industry View
Platforms themselves acknowledge the need for clarity.
Gaurav Mathur, founder of Safe Gold, noted that regulation could help establish a formal surveillance mechanism to ensure that purchased gold is held in secure vaults and can only be liquidated by the investor. SafeGold handled ₹1,950 crore worth of transactions this Dhanteras, up sharply from ₹800 crore last year.
What Investors Should Know
Until regulation is formalized, buyers of digital gold should:
- Verify platform credentials and vaulting partners
- Check whether the gold is insured and allocated in the investor’s name
- Prefer platforms backed by BIS-approved refiners
- Understand that digital gold is not covered by Sebi investor protection mechanisms
Digital gold remains a convenient product, but a regulatory framework will be necessary before it can be placed on the same footing as gold ETFs or sovereign gold bonds.