New Delhi: The recent clarification from the Securities and Exchange Board of India (SEBI) regarding Digital Gold is a positive and necessary move that helps define the boundaries of the digital ecosystem and significantly aids in educating customers on the nature of the product, according to experts.
SEBI recently issued a warning to investors regarding “digital gold” or e-gold products available online, stating that all such offerings operate outside the securities regulatory framework and hold significant risks for investors. The core clarification affirms a long-standing market practice: Digital Gold is not regulated as securities or commodity derivatives by SEBI, as it operates entirely outside the market regulator’s purview, similar to the direct sale of physical gold or jewellery.
To understand the clarification, we must first define the product: Digital Gold is essentially 24-karat physical gold sold via digital channels in fractional units. Crucially, every unit of digital gold purchased by a consumer on platforms such as PhonePe, Gpay, Paytm, Jar, Amazon, Mobikwik, Tanishq, CaratLane is fully backed by an equivalent quantity of physical gold. This gold is stored in secure, bank-grade vaults and is fully insured.
Therefore, Digital Gold is simply a modern, digital mechanism for purchasing and saving physical gold, rather than being a virtual asset or a distinct financial investment product like a Gold ETF or a market-regulated derivative. The SEBI notification simply clarifies and affirms this distinction, said analysts. The reliability of Digital Gold rests entirely on the integrity of the ecosystem partners. Gold sales on leading digital platforms (such as PhonePe, Paytm, GPay, Amazon, etc.) are powered by major industry leaders like MMTC-PAMP and SafeGold, both of whom hold authorized bullion trading licenses.
These arrangements ensure the highest level of trust through globally benchmarked practices: Every gram purchased is 100 per cent authentic, fully insured, and redeemable, backed by the seller's accredited operations. MMTC-PAMP, for example, is India’s only LBMA-accredited precious metals refiner. All gold holdings are physically allocated in the customer’s name. This metal is stored in world-class secured and insured vaults under the oversight of an independent trustee for additional customer protection, say experts.
Accounts are daily reconciled and independently verified through routine third-party audits, mirroring the rigour of self-regulatory frameworks adopted by sellers like MMTC-PAMP and SafeGold. The ability to save gold digitally democratizes access and offers a frictionless savings instrument that is clearly distinct from a market-linked investment product. Digital Gold's primary use case is facilitating mobile-first micro-savings.
Its low entry point removes the common barriers of storage hassle or minimum purchase value, enabling small, consistent savings. This accessibility has resulted in a notable demographic shift. While traditional gold purchases were concentrated in the 35–55 years age bracket, digital platforms have seen a strong uptake among the 18–35 years age bracket, empowering younger individuals to build their savings corpus early.
This ability to monitor digital gold holdings, similar to checking a balance on a UPI app, makes saving seamless and engaging. Customers have several easy ways to redeem their gold savings, like monetary transfer, physical delivery, jewellery conversion. The confluence of regulatory clarity and technological innovation underscores two critical points about the Digital Gold ecosystem. First, digital gold is unequivocally physical gold sold through a modern channel. The recent SEBI clarification reinforces this, confirming it is a physical asset sale, not a regulated investment security.
“Two, the entire process is built on uncompromising authenticity and security. Every gram is 100 per cent genuine, fully insured, stored in secure vaults, and subject to routine third-party audits, making digital gold one of the most trusted and frictionless ways for a new generation of Indians to secure a physical asset,” say experts.
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