Sebi cautions even as young Indians rush for digital gold: IBJA moves for self regulation

Kolkata: On Nov 8 this year, capital market regulator Sebi issued a terse warning that digital gold is not regulated by it and, therefore, investor protection mechanisms won't work for investors in it. However, with the bulls on a rampage in the gold market and the convenience of investing easily with a click on their smartphones, young Indians have thrown caution out of the window to invest in digital gold to the tune of 12 tonnes between January and November 2025. The figure indicates a surge from about 8 tonnes purchased in 2024.

The data has been sourced from calculation by World Gold Council. It was crunched from UPI transactions to purchase digital gold. Reports indicated that the price of 12 tonnes of gold works out to Rs 16,670 crore. However, the point to note is that this figure does not represent the nominal figure invested in digital gold since the price was different (much lower) than the rate used for this calculation.

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This is not the first time that regulators and policymakers communicated the dangers of investing in digital gold. However, the Nov communication of Sebi was direct, unambiguous and did not pull back any punch. "... digital gold products are different from SEBI regulated gold products as they are neither notified as securities nor regulated as commodity derivatives. They operate entirely outside the purview of SEBI. Such digital gold products may entail significant risks for investors and may expose investors to counterparty and operational risks. Investors / participants are made aware that none of the investor protection mechanisms under securities market purview shall be available for investments in such Digital Gold/ E-Gold products," read the advisory that the regulator put out.

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Since digital gold didn't come under the purview of any regulation -- which is predictably affecting its demand -- India Bullion & Jewellers Association or IBJA is applying finishing touches to a self-regulatory organisation for digital gold firms. Reports state that it is going to enroll members from January 2026. The broad objective of this regulation is to ensure that the digital gold holdings are properly audited and physical gold backs up the investments. It could also set up a floor for companies which can offer digital gold.

"We are developing technology to onboard and regulate digital gold players. There will be auditing of all the digital gold players periodically. This will create confidence among buyers of digital gold and the market will deepen further," IBJA national secretary Surendra Mehta told the media. MMTC PAMP, Augmont and SafeGold are major stakeholders in the digital gold market in the sense that they ensure safe keep of gold on behalf of customers. Interestingly, silver has provided much higher returns than gold in 2025.