Digital Gold Sector Takes Shine to Govt’s Formal Framework Signal

Why It Matters

Regulation will bring legal certainty, protect investors, and enable the sector’s scaling within India’s broader gold‑monetisation strategy. Clear oversight could also attract institutional capital and standardise industry practices.

Key Takeaways

• Monthly digital gold inflows hit ~₹3,000 crore ($360 M).
• AUM estimated at ₹15‑20 k crore ($1.8‑$2.4 B).
• Industry proposes Digital Precious Metal Council to set standards.
• Regulators debate RBI vs SEBI oversight for digital gold.
• Lack of consumer protection rules prompts calls for formal legislation.

Pulse Analysis

The digital gold ecosystem in India has exploded over the past 18 months, driven by fintech platforms that let consumers buy, store and sell fractional gold via mobile apps. With monthly inflows now exceeding $360 million and total assets under management approaching $2 billion, the market rivals traditional gold‑exchange‑traded funds in size. Players such as Safegold, Gullak, Jar, Google Pay and PhonePe have built extensive distribution networks, but the rapid expansion has outpaced the legal framework, leaving investors without the safeguards that apply to regulated securities.

Regulators are now confronting a policy vacuum. The Securities and Exchange Board of India (SEBI) recently cautioned that digital gold products fall outside existing investor‑protection mechanisms, while the Reserve Bank of India (RBI) is being considered for oversight given the product’s quasi‑banking characteristics. The core debate centers on whether the sector should be treated as a payment‑service activity, a securities offering, or a hybrid commodity. A formal framework would likely require licensing, audit standards, and mandatory physical gold backing, addressing concerns about mis‑representation and fraud that have surfaced as the market matures.

In response, industry participants are pre‑emptively organising a self‑regulatory body, the Digital Precious Metal Council of India. By establishing uniform standards, audit protocols and a code of conduct, the council aims to demonstrate readiness for formal supervision and to protect consumer confidence. Such proactive self‑regulation could smooth the path for RBI or SEBI involvement, unlock institutional investment, and embed digital gold more firmly within India’s broader gold‑monetisation agenda. The coming months will be pivotal as policymakers decide the regulatory home for this fast‑growing asset class.