Digital Gold May Enter a New Regulatory Era: What RBI-SEBI Oversight Could Mean for Investors

Digital gold is moving from a convenience-led financial product towards a potentially more closely regulated asset class.

Buying gold no longer necessarily means walking into a jewellery store or purchasing a coin or bar. A growing number of consumers have been buying small quantities of gold through digital platforms, sometimes starting with as little as ₹100. The appeal is straightforward: gold can be accumulated in small amounts, while the corresponding physical metal is held in vaults on behalf of customers.

But as digital gold becomes more mainstream, questions around ownership, custody, transparency and investor protection are becoming increasingly important.

The government is now examining whether this rapidly expanding segment should come under a formal regulatory framework. The Finance Ministry has sought views from regulators, banks and other stakeholders on the issue, with discussions reportedly involving the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI). One proposal under consideration is to recognise digital gold as a security under the Securities Contracts (Regulation) Act, 1956.

What could change for digital gold?

One of the key proposals being discussed is a requirement for digital gold providers to maintain equivalent physical gold against the digital units issued to customers.

In simple terms, if a platform sells digital gold representing a particular quantity of the metal, an equivalent quantity of physical bullion would need to be held in secure vaults. Platforms could also be required to provide periodic disclosures on their gold holdings.

Such requirements could bring greater visibility into one of the most important aspects of digital gold: whether the digital claim held by a customer is adequately backed by physical gold.

The discussions are still at a consultation stage, however, and no final regulatory framework has been announced.

Why has regulation become an issue now?

Digital gold sits in an unusual space within India's investment landscape. It combines the familiarity of physical gold with the convenience of a digital transaction, but historically it has not operated under the same regulatory structure as products such as gold ETFs or Electronic Gold Receipts.

SEBI had highlighted this distinction in a November 2025 public caution. The regulator said digital gold products offered by online platforms were different from SEBI-regulated gold products because they were neither notified as securities nor regulated as commodity derivatives. It also warned that such products could involve counterparty and operational risks and that securities-market investor protection mechanisms did not apply to them.

The proposed regulatory discussions therefore represent a potentially significant shift. Instead of leaving digital gold primarily within a platform-led ecosystem, the government is examining whether clearer regulatory responsibilities should be established around the product.

The physical backing question

Physical backing could become one of the most important pillars of any future framework.

For consumers, the basic premise of digital gold is that a digital holding corresponds to actual gold. A formal requirement for equivalent physical bullion could make that relationship more transparent and create clearer obligations for providers.

But physical backing alone would not answer every question.

A comprehensive framework would also need clarity on how the gold is stored, who has custody of it, how frequently holdings are audited, how ownership is recorded and what happens to customer holdings if a platform faces financial or operational difficulties.

These issues matter because digital ownership ultimately depends on a chain of entities responsible for purchasing, storing, safeguarding and accounting for the underlying metal.

What could RBI and SEBI bring to the ecosystem?

The involvement of financial regulators could potentially create greater standardisation across the digital-gold market.

For platforms, this could mean more clearly defined compliance, reporting, custody and audit requirements. For consumers, it could provide greater clarity around the nature of the product and the responsibilities of the entities offering it.

Industry participants have also argued that regulatory oversight could help establish a more level playing field for legitimate operators and strengthen consumer confidence as adoption grows.

At the same time, the exact division of responsibilities between RBI and SEBI remains part of the ongoing discussions. The final regulatory structure will determine how digital gold providers operate and what protections ultimately become available to customers.

Convenience meets accountability

The rise of digital gold reflects a broader shift in how Indians are accessing traditional assets.

The product has lowered the entry barrier to gold ownership. Consumers do not necessarily need to accumulate enough money to purchase a physical coin or bar at one time. Digital platforms allow smaller transactions and eliminate the need for individuals to physically store the metal themselves.

But greater convenience also brings a need for greater accountability.

As financial products move from physical marketplaces to digital platforms, questions that were once visible to consumers — such as where an asset is held and who owns it — can become less obvious. Regulation can play a role in making those relationships more transparent.

The current discussions around digital gold are therefore not simply about bringing another product under regulatory oversight. They point to a larger question for India's increasingly digital financial ecosystem: when an asset is bought through a screen, how clearly should the ownership, backing and protection behind that digital claim be defined?

For now, the framework remains under consideration. If the proposals move forward, the eventual rules could shape how digital gold is issued, stored, reported and sold in India, while setting clearer expectations for both platforms and consumers.