India Digital Gold Faces Tighter RBI, SEBI Rules

Officials are said to be consulting regulators, banks and other stakeholders on whether digital gold should be treated as a security under the Securities Contracts (Regulation) Act, 1956, according to the Economic Times. That would close a long-standing gap: digital gold currently sits outside the SEBI framework that governs gold ETFs and other regulated investment products.

For investors, the key issue is trust. A formal rulebook would likely require platforms to prove the existence, storage and audit trail of the bullion behind customer balances, reducing the risk that lightly supervised operators could sell claims and later shut down. It could also strengthen anti-money laundering checks and custody standards, even if it raises costs for providers and eventually for users through higher fees.

The push comes after SEBI warned investors in 2025 that digital gold products are distinct from SEBI-regulated gold instruments and do not enjoy the same protections. Some large industry players now appear to support clearer supervision, arguing that the rapid rise in digital gold and silver use among retail buyers demands more transparency.

Gold-linked assets have also been active globally, with gold funds such as GLDM and PHYS trading with elevated volatility as investors weigh macro uncertainty and persistent demand for bullion exposure. The next catalyst is the government’s final framework, including which regulator gets primary oversight and whether physical backing becomes mandatory for every digital unit sold.