India has witnessed a sharp rise in digital gold investments
this year, with purchases climbing nearly 50% despite regulatory caution from
the market watchdog. Data cited by The Economic Times, based on estimates from
the World Gold Council (WGC), shows Indian investors-led largely by younger
buyers-purchased around 12 tonnes of digital gold between January and November.
The estimate draws on transaction data released for the first time by the
National Payments Corporation of India (NPCI), which tracks UPI-based digital
gold purchases. At current Mumbai spot prices, this volume of 24-karat gold is
valued at approximately Rs 16,670 crore. Industry estimates suggest that
digital gold purchases stood at about 8 tonnes in 2024, underscoring the pace
of growth this year.
Digital gold allows consumers to buy, sell, and hold gold
online without taking physical delivery, with investments starting from as
little as Rs 1. This low entry barrier has made the product particularly
popular among first-time investors, millennials, and Gen Z users accessing gold
through fintech platforms and mobile apps.
However, demand slowed after the Securities and Exchange
Board of India (Sebi) issued an advisory in November, cautioning investors that
digital gold is not a regulated security and does not fall under existing
commodity market regulations, unlike gold exchange-traded funds or electronic
gold receipts. Sebi urged investors to carefully assess the risks before using
such platforms.
Despite the regulatory warning, industry participants argue that digital gold
is emerging as a transparent and efficient investment avenue. Sachin Jain,
regional chief executive for India at the WGC, told The Economic Times that
gold continues to be a core asset for Indian households, and digital formats
improve accessibility through fractional ownership, market-linked pricing, and
reduced concerns over storage and purity. He added that digitalisation would be
key to keeping gold relevant for Indian consumers.
Leading players in the digital gold space include MMTC PAMP,
Augmont, and SafeGold, which store physical gold in secure vaults on behalf of
customers. Investors can liquidate their holdings at any time through the
platforms, providing ease of exit and liquidity.
The absence of formal regulation has prompted the India
Bullion & Jewellers Association (IBJA) to initiate a self-regulatory
organisation (SRO) for digital gold providers. The SRO is expected to begin
onboarding members in January and will focus on periodic audits, ensuring full
physical backing of digital holdings, and enforcing minimum net worth
requirements for participating firms.
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