The demand for digital gold saw a major surge between the January-November period this year, especially from younger buyers, despite a warning from the Securities
and Exchange Board of India (Sebi). The SEBI, last month, warned that the product is still unregulated, and it did impact the the demand yet the period saw an estimated purchases of 12 tonnes, as per the World Gold Council Data. The WGC’s estimate is based on data from the National Payments Corporation of India (NPCI) on UPI transactions used to buy digital gold. NPCI released this data for the first time this year. Based on Wednesday’s spot price in Mumbai, 12 tonnes of 24-karat gold is valued at around Rs 16,670 crore. Industry estimates show that Indians bought digital gold equivalent to about 8 tonnes in 2024. Also Read - Gold Crosses $4,530, Silver Tops $75: Why Precious Metals Are on Fire Right Now Digital gold allows people to buy, sell and hold gold online without taking physical delivery. Purchases can start from as little as Rs 1, making it popular among first-time investors and younger buyers who use apps and fintech platforms. While a warning from market regulator Sebi has made some investors cautious, industry participants are calling for a clear regulatory framework for digital gold, which they say is becoming a transparent way to invest in the safe-haven asset. “Gold continues to hold a deeply rooted place in Indian households as an important asset class and digital gold builds on this legacy by improving access through fractional ownership and transparent, market-linked pricing, while addressing concerns around storage and purity,” an Economics Times report quoted Sachin Jain, regional chief executive (India) at the World Gold Council (WGC). “Digitalisation will be critical to ensuring that gold remains a trusted and relevant asset for Indian consumers,” he added. Major players in India’s digital gold market include MMTC PAMP, Augmont and SafeGold. These companies store gold in secure vaults on behalf of customers, who can sell their holdings at any time through the platform, providing easy liquidity. Demand slowed after Sebi, in a November advisory, said digital gold is not a regulated security and is not covered under existing commodity market rules, unlike gold exchange-traded funds or electronic gold receipts. The regulator advised investors to be aware of the risks before using such platforms. In response to the lack of regulation, the India Bullion & Jewellers Association (IBJA) is setting up a self-regulatory organisation (SRO) for digital gold companies. The SRO is expected to start onboarding members in January and will ensure that customer holdings are fully backed by physical gold and regularly audited. It will also set minimum net worth requirements for digital gold providers. “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,” said Surendra Mehta, national secretary of IBJA. The association expects to finalise the rules by end-March or early April next year. Industry executives said millennials and Gen Z make up nearly two-thirds of digital gold buyers, highlighting a shift towards digital-first investing. However, the Sebi advisory caused confusion in the market. “Post Sebi’s order, there was a lot of confusion in the market,” said a senior executive at a digital gold platform. “All the stakeholders including the digital gold buyers have almost stopped buying gold digitally. We had to convince them to return to the platform,” he added.
