India is considering tighter safeguards for digital gold, including one-to-one physical bullion backing, as the popular app-based investment remains outside formal financial supervision.
India is weighing tighter rules for digital gold, including a requirement that each unit be backed one-to-one by physical bullion, at a time when the investment product has become popular with savers seeking easy, fractional exposure to the metal, according to reporting by the Times of India and industry commentary echoed by other publications. The move would bring a long-regulated asset class into a framework that, until now, has largely operated outside formal financial supervision.
Digital gold lets customers buy and sell claims on physical metal through an app or online platform, with the bullion supposedly held in vaults on the customer’s behalf. The appeal is obvious: investors can trade small amounts, move holdings quickly and, in some cases, redeem them for physical delivery. But the structure also leaves room for doubt about whether providers always have the metal they say they hold, which is why critics have long warned about counterparty and operational risk.
That regulatory gap has already been flagged by India’s markets watchdog. Last year, the Securities and Exchange Board of India said digital gold products were neither notified as securities nor classified as commodity derivatives, and therefore sat outside its remit. SEBI warned that such products could expose investors to significant risk. At the same time, a separate report in Mint said SEBI chairman Tuhin Kanta Pandey has since clarified that the regulator is not drafting new rules for digital gold, suggesting that any policy shift may still be at an early stage.
Even so, the industry is moving to impose some discipline on itself. The Digital Precious Metals Assurance Council of India, a self-regulatory body formed in 2026, has drawn in several major platforms, including MMTC-PAMP, one of India’s largest digital gold providers. Its managing director, Samit Guha, told the Times of India that the digital gold and silver market “needs some regulatory oversight urgently” and said the council aims to standardise buying, selling and storage practices. For now, that voluntary effort underlines the central concern: convenience is not the same as security, and without hard backing rules, investors remain dependent on the solvency and integrity of the middleman.
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