Digital Gold in India: Regulatory Gap Explained
Why in the news
A regulatory gap around digital gold surfaced after Sebi ruled it is not a security, leaving investors exposed to counterparty, liquidity and pricing risks since vault and purity checks are not mandatory for all providers.
Key facts
- After Sebi’s caution, withdrawals from platforms nearly tripled.
- Firms accept regulation by Sebi or another regulator.
- If Sebi declines, IBJA and companies may form an SRO seeking government approval.
| Product | Position |
|---|---|
| Digital gold | Outside Sebi and RBI |
| Gold ETFs | Under Sebi |
| EGRs | Brought under Sebi through SCRA amendments |
Options
- Declare it a security under the Securities Contracts (Regulation) Act, 1956.
About EGRs
- Instruments from banks or depositories showing ownership of vaulted gold; exchange-tradable; introduced by Sebi in 2017.
Exam angle
- Industry body: IBJA; law: SCRA, 1956.