Digital Gold Purchases Surge 50% to 12 Tonnes Despite Sebi Regulatory Warning
Indian investors bought an estimated 12 tonnes of digital gold from January to November, up from 8 tonnes in the previous comparable period, according to the World Gold Council. This growth occurred despite regulatory warnings from SEBI, which caused temporary market confusion. In response, the India Bullion & Jewellers Association is establishing a self-regulatory organization for digital gold players, expected to be fully operational by early April. Digital gold's popularity is particularly high among millennials and Gen Z, who account for two-thirds of buyers.
*this image is generated using AI for illustrative purposes only.
Indian investors have significantly increased their digital gold purchases, with an estimated 12 tonnes purchased during January-November, according to the World Gold Council (WGC). This represents a substantial increase from 8 tonnes purchased in the previous comparable period, despite regulatory warnings that have created market uncertainty.
Market Performance and Value
The digital gold market has demonstrated robust growth, with the 12 tonnes purchased representing approximately ₹16,670 crore based on Wednesday's spot price for 24-karat gold in Mumbai. The WGC's estimates are derived from National Payments Corporation of India (NPCI) data on UPI transactions for digital gold purchases, with NPCI publishing this data for the first time this year.
| Parameter | Details |
|---|---|
| Volume Purchased | 12 tonnes (Jan-Nov) |
| Market Value | ₹16,670 crore |
| Previous Period | 8 tonnes |
| Data Source | NPCI UPI transactions |
Regulatory Challenges and Market Response
The market faced significant headwinds after the Securities and Exchange Board of India (Sebi) issued a November advisory stating that digital gold is not a regulated security under its purview or existing commodity market rules. This differs from regulated gold investment products such as gold exchange-traded funds and tradable electronic gold receipts. The regulator cautioned investors to consider associated risks before using digital gold platforms.
Following Sebi's warning, market participants reported substantial confusion and a temporary halt in digital gold purchases. A senior executive at a digital gold platform stated, "Post Sebi's order, there was a lot of confusion in the market. All the stakeholders including the digital gold buyers have almost stopped buying gold digitally. We had to convince them to return to the platform."
Self-Regulatory Framework Development
In response to the regulatory gap, the India Bullion & Jewellers Association (IBJA) has established a self-regulatory organisation (SRO) for digital gold players. The SRO is expected to begin onboarding members in January, with comprehensive rules and regulations anticipated by end-March or early April.
| SRO Features | Implementation Details |
|---|---|
| Launch Timeline | January onboarding |
| Audit Requirements | Periodic auditing of all players |
| Gold Backing | Full physical gold backing verification |
| Net Worth Rules | Minimum requirements for companies |
| Complete Framework | March-April completion |
IBJA national secretary Surendra Mehta commented, "We are developing technology to onboard and regulate digital gold players. There will be auditing of all the digital gold players periodically. This will create confidence among buyers of digital gold and the market will deepen further."
Market Dynamics and Demographics
Digital gold platforms allow consumers to buy, sell, and hold gold online without physical delivery, with purchases starting from as little as ₹1. This accessibility has made the product particularly popular among first-time investors and younger demographics using apps and fintech platforms. Industry executives report that millennials and Gen Z account for two-thirds of digital gold buyers, reflecting a generational shift toward digital-first investing.
Major players in India's digital gold market include MMTC PAMP, Augmont, and SafeGold, which store gold in vaults on behalf of customers and provide liquidity through platform-based selling options.
Industry Outlook
Sachin Jain, WGC's regional chief executive for India, stated, "Gold continues to hold a deeply rooted place in Indian households as an important asset class and digital gold builds on this legacy by improving access through fractional ownership and transparent, market-linked pricing, while addressing concerns around storage and purity. Digitalisation will be critical to ensuring that gold remains a trusted and relevant asset for Indian consumers."
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