In Regulating Digital Gold, India Should Look to Britain

Why It Matters

Without uniform regulation, Indian investors face price manipulation and loss of savings, while the fragmented system hampers market confidence and limits the sector’s sustainable growth.

Key Takeaways

• India’s digital gold market reached ~₹16,000 cr ($2.2 bn) in 2025
• SEBI’s EGR framework excludes many fintech platforms, creating regulatory gaps
• UK’s FCA uses functional approach, covering all digital‑gold providers
• Dual authorisation by RBI and SEBI could close oversight loopholes
• Misleading ads and price arbitrage threaten retail investors’ savings

Pulse Analysis

Digital gold has exploded in India, with investors buying roughly 12 tonnes of the asset between January and November 2025 – a transaction volume of about ₹16,000 crore, or $2.2 billion. The product’s appeal lies in instant online purchase, storage in electronic gold receipts (EGRs), and the option to redeem physical gold later. Yet the Securities and Exchange Board of India (SEBI) only regulates platforms that issue EGRs, leaving fintech giants such as Paytm, Google Pay and PhonePe outside its jurisdiction. This regulatory asymmetry has spawned parallel markets, misleading price signals and a heightened risk of fraud for retail savers.

The United Kingdom’s Financial Conduct Authority (FCA) offers a contrasting model. By applying the functional approach under the Financial Services and Markets Act, the FCA treats any service that enables digital‑gold investment as a regulated activity, regardless of the underlying platform. Authorization, capital adequacy and strict advertising rules apply uniformly, eliminating the split between “regulated” and “unregulated” providers. The result is greater price transparency, reduced arbitrage opportunities, and stronger consumer protection – outcomes Indian policymakers are keen to replicate without copying the UK’s exact legal framework.

Adopting a similar functional regime in India would require several concrete steps. First, SEBI should broaden the definition of EGR to encompass all digital‑gold offerings, compelling fintech firms to route transactions through SEBI‑approved vault managers. Second, a dual‑authorisation system involving the Reserve Bank of India and SEBI could close the current oversight gap for payment‑app‑based gold products. Finally, regular stakeholder consultations and a statutory review mechanism would keep regulations aligned with market innovation. Such reforms would align India’s digital‑gold market with global best practices, safeguard retail investors and sustain the sector’s rapid growth.