Buying digital gold? RBI, Sebi may soon tighten rules around your investment

Digital gold has become a popular way to invest in small amounts, but the rules around it could soon change. The government is considering formal regulation of the segment, including possible RBI and Sebi oversight.

In Short

• Government proposes tighter rules for digital gold backing by physical gold
• Concerns over unregulated market and investor protection raised by Sebi
• Industry forms council to standardise and push for regulatory oversight

The government is looking at tighter rules for digital gold, with a proposal to make sure every unit sold to investors is backed by physical gold. The move could also bring the sector under the joint oversight of the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (Sebi), reported The Economic Times.

People familiar with the matter said the finance ministry has sought views from regulators, banks and other stakeholders on how digital gold should be regulated.

There is broad consensus among stakeholders that digital gold should be recognised as a security under the Securities Contracts (Regulation) Act, 1956, they said.

SEBI HAD FLAGGED RISKS AROUND DIGITAL GOLD

The move comes after Sebi raised concerns about digital gold in 2025 and warned investors about dealing in such products.

The market regulator had said digital gold products were different from gold products regulated by Sebi. They were neither notified as securities nor regulated as commodity derivatives.

Sebi said digital gold products operated entirely outside its regulatory purview.

The digital gold industry manages around $3 billion in assets, according to industry estimates. The average investment or purchase size is around Rs 100, highlighting the product's popularity among retail investors.

A bank executive said stakeholders broadly agreed that digital gold had gained acceptance among investors but remained an unregulated segment that should come under regulatory supervision. The executive added that recommendations had been submitted to the government.

CONCERNS OVER INVESTOR PROTECTION

The lack of formal regulatory oversight has also raised concerns about the entry of smaller and less-established players into the sector.

Another executive said some fly-by-night operators had entered the market in the absence of regulatory supervision. This, in turn, raised concerns around investor protection and the possibility of money laundering.

The executive said bringing digital gold under the supervision of both the RBI and Sebi would help prevent regulatory arbitrage and remove uncertainty for legitimate participants, including investors.

The industry, too, has been calling for greater regulatory oversight as more consumers turn to digital gold.

INDUSTRY PUSHES FOR COMMON RULES

Samit Guha, managing director of MMTC-PAMP, said the digital gold and silver industry needs regulatory oversight given its growing acceptance among consumers, the report mentioned.

MMTC-PAMP is among the major players in India's digital gold market.

Digital gold platforms have also formed a self-regulatory organisation this year — the Digital Precious Metals Assurance Council of India. Its members include bullion providers such as MMTC-PAMP and SafeGold, as well as platforms including PhonePe, BharatPe, MobiKwik, Gullak, Lenden Club and CRED.

Guha said the council is working to standardise processes around the buying, selling and storage of gold, along with other related activities.

The aim, he said, is to develop best-in-class processes and ensure that customer interests remain protected.

In other words, if the proposal goes ahead, digital gold could move from an largely unregulated product to one operating under a formal regulatory framework. For consumers, the proposed changes could bring greater clarity and stronger safeguards to a product that has become increasingly popular for small-ticket gold investments.

- Ends