The India Bullion & Jewellers Association (IBJA) reached out to the Securities and Exchange Board of India (Sebi), urging it to place digital gold providers under the markets regulator or any other suitable agency’s supervision. The move is aimed at restoring investor confidence and ensuring industry legitimacy.

According to the report, the IBJA wrote to Sebi on 11 November, stating that several digital gold companies themselves want regulatory supervision to reassure consumers that they are not being misled.

“We have been approached by various ‘digital gold’ companies and they have shown their willingness to be regulated either through Sebi or any other regulator as suggested by you,” the association wrote to Sebi Chairman Tuhin Kanta Pandey.

The proposal comes after Sebi issued a warning for investors on 8 November, stating that digital gold products do not fall under its jurisdiction. The regulator noted that the digital gold products are neither classified as securities nor regulated as commodity derivatives.

Digital gold is 100% backed by physical gold, says association

The IBJA provided several key arguments and points for Sebi to consider its proposal for regulating ‘digital gold.’

— It claimed that many existing products are run by BIS and NABL-approved refiners.

— These refiners have established a mechanism that allows the physical gold to be verified by any third party.

— Many of these digital gold companies display their third-party verification certificate on their websites at regular intervals, ensuring transparency.

— All the digital gold funds are also collected through a banking mechanism.

— A significant advantage is the ability for individuals to invest in digital gold with as little as ₹1, which is not the case for Sebi-regulated instruments.

— Digital gold is 100% backed by physical gold, distinguishing it from other physical assets like cryptocurrency, which operate without any asset backing.

The association also suggested that entities that fail to comply with the new guidelines should be removed and asked to cease digital gold trading.