Digital Gold May Come Under RBI and SEBI Oversight: What Investors Need to Know
Published: September 20, 2026
India's rapidly growing digital-gold market could be heading toward a formal regulatory framework.
The government is discussing tighter rules for digital gold, including a proposal that every digital unit should be backed by an equivalent quantity of physical gold. Joint oversight by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) is also being considered.
The proposals are still under discussion. No final RBI or SEBI regulation has been announced yet.
That distinction matters for anyone buying gold through an app today.
What Is Digital Gold?
Digital gold allows users to purchase small quantities of gold through online platforms, sometimes with investments starting at around ₹10 or ₹100.
The idea is simple: instead of physically holding a gold coin or bar, the investor receives a digital representation of gold that is intended to correspond to physical bullion held in a vault by the platform or its bullion partner.
According to industry estimates reported by The Economic Times, India's digital-gold industry manages approximately $3 billion in assets, with an average transaction size of around ₹100.
Its low entry cost has helped make the product accessible to retail investors.
Why Is the Government Considering Regulation?
The biggest issue is the regulatory gap.
SEBI warned investors in 2025 that digital gold products were different from regulated products such as gold ETFs, exchange-traded commodity derivatives and electronic gold receipts.
Because digital gold was not notified as a security or regulated as a commodity derivative, it operated outside SEBI's regulatory framework, meaning the usual securities-market investor-protection mechanisms did not automatically apply.
The government's current discussions could change that structure.
One proposal under consideration is recognizing digital gold as a security under the Securities Contracts (Regulation) Act, 1956.
Physical Gold Backing Could Become a Formal Requirement
Perhaps the most significant proposal is mandatory physical backing.
Under the idea being discussed, every digital unit sold to investors would have to be backed by an equivalent quantity of physical bullion.
In practical terms, that could create clearer standards around:
Gold ownership
Vault custody
Independent audits
Redemption
Reporting
Treatment of customer assets if a platform encounters financial difficulties
Mint noted that such requirements could make the relationship between digital holdings and physical bullion more transparent for investors.
Digital Gold Is Not the Same as a Gold ETF
This distinction is important.
Seeing the word "gold" in an investment app does not mean every gold product provides the same regulatory protections.
A gold ETF operates within the regulated securities-market framework. Digital gold, under the current structure, does not automatically carry the same regulatory status.
SEBI's earlier warning specifically highlighted this difference.
The proposed regulatory framework could therefore bring digital gold closer to the formal financial system, but the final rules would determine exactly what protections and obligations apply.
What Could Change for Investors?
Formal oversight could make the digital-gold industry more standardized.
Platforms could face clearer requirements regarding the storage and verification of physical gold. Investors may also receive more transparent information about custody arrangements, audits and redemption procedures.
At the same time, regulation could change how digital-gold companies operate.
Providers may face higher compliance, audit and custody costs. Those costs could potentially affect fees or the economics of offering very small transactions.
The exact impact cannot be known until the government and regulators settle the final framework.
A Growing Market at a Regulatory Turning Point
The government's discussions reflect how quickly digital gold has moved from a niche online product toward a mainstream retail investment format.
The Economic Times reported that industry participants themselves have been calling for greater regulatory supervision, while the sector has also developed a self-regulatory organisation involving major bullion providers and digital platforms.
The proposed framework could therefore represent a major shift: from a largely platform-based arrangement toward a more formally supervised investment ecosystem.
But investors should remember one important point.
The proposal is not yet the rule.
Until RBI, SEBI or the government formally announce the final regulatory framework, investors should not assume that proposed protections are already in force.
For anyone holding or considering digital gold, understanding the platform's custody arrangements, redemption terms, fees and physical-backing disclosures remains important.
The next stage will be watching whether the government converts the current discussions into formal regulations—and what those rules ultimately require from digital-gold providers.
Source: The Economic Times and Mint, September 2026.