Gold has always been more than just an asset in India; it’s a symbol of security, prosperity, and tradition. With the rise of digital platforms, gold is no longer locked in lockers or bank vaults; it’s just a few taps away on your phone.
From tech-savvy millennials to cautious first-time investors, digital gold is becoming a go-to choice for those who want the safety of gold with the flexibility of modern finance.
But here’s the question many still ask:
Who regulates digital gold in India, and how safe is it?
Let’s break it down.
Is Digital Gold Regulated by the RBI or SEBI?
NOT YET.
Digital gold currently does not fall under the direct regulation of the Reserve Bank of India (RBI) or the Securities and Exchange Board of India (SEBI). Unlike mutual funds or bank deposits, digital gold doesn’t operate under a formal regulatory framework.
But that doesn’t mean it’s unprotected.
Most platforms offering digital gold follow industry best practices, work with reputed partners, and maintain strict internal checks to safeguard investor interests.
How Digital Gold Maintains Trust and Safety
Backed by Reputed Custodians
Platforms typically partner with established entities like:
- MMTC-PAMP
- SafeGold
- Augmont
- Bright DiGi Gold
These custodians ensure that every unit of digital gold is backed 1:1 by physical 24K (99.9% pure) gold, stored in secure, audited vaults. This gold is fully insured against theft, loss, or damage, providing real-world security for your digital investment.
SEBI’s Role: Indirect but Meaningful
While SEBI doesn’t regulate digital gold directly, it played a key role in shaping the ecosystem. In 2021, SEBI barred stockbrokers from offering digital gold through their platforms.
Why? To clarify that digital gold does not fall under SEBI’s jurisdiction.
This move forced wealth-tech platforms to rethink how they present digital gold, making them more transparent about their regulatory status.
Platform-Level Safeguards Investors Should Know
In the absence of a formal regulator, trusted digital gold providers adopt voluntary safeguards to protect buyers:
- Full KYC to meet anti-money laundering norms
- Daily reconciliation of digital and physical gold holdings
- Transparent pricing, linked to real-time market rates
- Redemption options for physical gold or cash
Know the Tax Rules
Just like physical gold, digital gold attracts taxes you need to plan for:
- GST: 3% is charged at the time of purchase
- Capital Gains Tax:
- Short-term (under 3 years): Taxed as per your income slab
- Long-term (over 3 years): 20% with indexation benefits
So while digital gold feels digital, your tax obligations are very real.
Why Regulation Matters to You
No formal regulation means no guaranteed legal protection.
- If a platform fails, there’s no dedicated authority to handle disputes
- No grievance redressal system like that of banks or mutual funds
- Your investment’s safety depends entirely on the credibility of the platform
That’s why choosing platforms backed by strong custodian ties, insurance, and transparent practices is not optional; it’s essential.
What’s Next? A Possible Regulatory Framework
As digital gold grows in popularity, the Indian government is exploring a formal regulatory framework. Once implemented, this would:
- Standardise practices
- Boost investor confidence
- Align digital gold with mainstream financial products
Final Thoughts
Digital gold offers a smart, flexible way to diversify your portfolio, but until regulations catch up, it’s up to investors to stay cautious and informed.
- Choose well-known platforms
- Check for gold backing and insurance
- Understand taxation and redemption policies
Ready to go for gold? Start your digital gold journey today on InCred Money.
Source: Brightdigigold
