Digital gold has surged in popularity, particularly among younger investors who favor small investments, quick liquidity, and no storage fees. However, its rapid growth has raised a crucial question: who oversees these offerings?
In response to this uncertainty, the India Bullion & Jewellers Association (IBJA) has urged the Securities and Exchange Board of India (Sebi) to establish a formal regulatory framework for digital gold providers. The aim is to enhance consumer safety by providing clearer oversight, as reported by The Economic Times.
IBJA reached out to the markets regulator on November 11, advocating for digital gold platforms to fall under Sebi’s supervision or another relevant regulatory body. The industry group highlighted that several digital gold firms themselves seek regulatory scrutiny to reassure customers about the authenticity of their offerings.
Surendra Mehta, IBJA’s national secretary, stated, “We have been approached by various digital gold companies that are eager to be regulated.” He emphasized that many digital gold products have the backing of refiners accredited by BIS and NABL.
This request follows a warning from Sebi to investors about the unregulated nature of digital gold products. Sebi clarified that these products do not fall under its purview as they are not classified as securities or commodity derivatives, thus lacking the protections afforded to gold ETFs, electronic gold receipts, or exchange-traded derivatives.
It is noteworthy that digital gold has gained traction among younger consumers, particularly during festive seasons and promotional sales events.