Whalesbook
The India Bullion & Jewellers Association (IBJA) has formally urged the Securities and Exchange Board of India (SEBI) to bring digital gold providers under its regulatory ambit or designate another formal regulator. This move is intended to address growing concerns among consumers and dispel fears that they might be duped.
SEBI had previously cautioned investors that digital gold products are not regulated as securities or commodity derivatives and fall outside its jurisdiction. Consequently, they do not benefit from the investor-protection mechanisms available for SEBI-regulated gold instruments like Gold ETFs or Electronic Gold Receipts.
IBJA's national secretary, Surendra Mehta, stated that various digital gold companies have expressed their willingness to be regulated. He noted that several digital gold products are backed by refiners approved by the Bureau of Indian Standards (BIS) and the National Accreditation Board for Testing and Calibration Laboratories (NABL).
Digital gold has seen a significant surge in popularity, particularly among younger investors, who are attracted by its instant liquidity and the absence of locker costs. Gaurav Mathur, founder and CEO of digital gold platform SafeGold, highlighted the need for government clarity and a surveillance system to ensure gold is properly stored in vaults and can only be liquidated when the consumer desires. SafeGold reported transactions worth ₹1,950 crore during this year's Dhanteras, a substantial increase from ₹800 crore last year.
Impact:
The move towards regulating digital gold could significantly boost investor confidence and market transparency. It may lead to clearer guidelines for digital gold providers, enhanced investor protection mechanisms, and potentially integrate these products more formally into India's financial market ecosystem. This could also influence the trading volumes and operational models of digital gold platforms. Rating: 7/10.