The India Bullion & Jewellers Association (IBJA) has formally requested the Securities and Exchange Board of India (Sebi) to bring digital gold providers under regulatory supervision. This significant move aims to restore investor confidence and establish legitimacy within the rapidly growing digital gold sector.
Formal Request for Regulatory Oversight
On 11 November, the IBJA sent a detailed letter to Sebi Chairman Tuhin Kanta Pandey, highlighting that numerous digital gold companies have themselves expressed willingness to come under regulatory supervision. The association revealed that these companies want proper oversight to reassure consumers they are not being misled about their investments.
This proposal comes directly following Sebi's investor warning issued on 8 November, where the markets regulator clarified that digital gold products do not fall under its jurisdiction. Sebi had explicitly stated that these products are neither classified as securities nor regulated as commodity derivatives under current regulations.
Key Arguments for Regulation
The IBJA presented several compelling arguments to support its case for regulating digital gold platforms. The association emphasized that many existing digital gold products are operated by refiners approved by the Bureau of Indian Standards (BIS) and National Accreditation Board for Testing and Calibration Laboratories (NABL).
All digital gold investments are 100% backed by physical gold, creating a crucial distinction from other digital assets like cryptocurrency that operate without any underlying asset backing. This fundamental characteristic provides a layer of security for investors concerned about the volatility of unbacked digital assets.
The association also highlighted several transparency mechanisms already in place within the industry. These include established procedures allowing third-party verification of physical gold backing, regular display of verification certificates on company websites, and collection of all investment funds through proper banking channels rather than informal systems.
Accessibility and Compliance Measures
One of the most significant advantages of digital gold highlighted by IBJA is its exceptional accessibility. Unlike Sebi-regulated investment instruments that often require substantial minimum investments, individuals can start investing in digital gold with as little as ₹1. This low entry barrier makes gold investment accessible to a much broader segment of the population.
The association proposed strict compliance measures for the proposed regulatory framework. Entities failing to meet the new guidelines should be removed from the market and required to cease all digital gold trading activities. This zero-tolerance approach towards non-compliance would help maintain industry standards and protect consumer interests.
This regulatory push represents a crucial step toward formalizing India's digital gold market, potentially bringing greater security and transparency to millions of investors who have embraced this modern form of gold investment.
