IBJA has written to Sebi urging it to bring digital gold sellers under formal regulation.
The request follows Sebi’s recent warning to investors about treating digital gold as an investment.
IBJA said regulation would help address concerns that customers may be misled by digital gold providers.
Digital Gold Platforms Ask for Formal Regulation After Sebi Flags Risks
On November 8, Sebi issued a public advisory stating that "digital gold products are different from Sebi-regulated gold products as they are neither notified as securities nor regulated as commodity derivatives"
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India Bullion and Jewellers Association (IBJA), the bullion and jewellery industry body, has reportedly written to the Securities and Exchange Board of India (Sebi) seeking to bring digital gold sellers under its regulatory ambit. The move comes after the market regulator warned investors against treating digital gold as an investment.
In its November 11 letter, IBJA told Sebi that regulation could help dispel fears that customers are being misled by digital gold providers, according to the Economic Times (ET).
IBJA’s national secretary, Surendra Mehta, told the publication that several digital gold companies have approached the body expressing their “willingness to be regulated either through Sebi or any other regulator”.
He noted that many digital gold products are backed by refiners approved by the Bureau of Indian Standards (BIS) and the National Accreditation Board for Testing and Calibration Laboratories (NABL). Digital gold has gained popularity among younger buyers, with demand rising sharply during festivals and shopping events.
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However, on November 8, Sebi issued a public advisory stating that “digital gold products are different from Sebi-regulated gold products as they are neither notified as securities nor regulated as commodity derivatives”.
“They operate entirely outside the purview of Sebi. Such digital gold products may entail significant risks for investors and may expose them to counterparty and operational risks. None of the investor protection mechanisms under the securities market framework apply to investments in such digital gold or e-gold products,” the regulator added.
Sebi instead advised investors to use commodity derivative contracts, gold exchange-traded funds (ETFs) offered by mutual funds, and electronic gold receipts (EGRs) traded on stock exchanges.
In India, digital gold is currently offered by platforms such as Paytm, PhonePe, Gullak, and MMTC-PAMP, as well as jewellers like Tanishq and Jos Alukkas.
According to Trading Economics, gold has returned over 52% in the past year. Prices have eased over the past month following Diwali.
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