Digital gold may face RBI, Sebi oversight

The Indian government has initiated discussions to tighten regulatory oversight on digital gold products, according to reports from the Economic Times. Officials are reportedly considering a framework that would require every unit of digital gold sold to be backed by physical bullion, ensuring tangible asset security for investors. The proposed changes aim to bring these products under the joint supervision of the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI).

Stakeholders, including banks and market regulators, have been invited to provide feedback on the proposal. The emerging consensus among policymakers is to classify digital gold as a security under the Securities Contracts (Regulation) Act of 1956. This move would formalize the status of digital gold, which currently occupies a regulatory gray area that has previously drawn warnings from market authorities.

In 2025, SEBI issued a circular cautioning investors about the risks associated with digital gold, noting that such products were not regulated as securities or commodity derivatives. By bringing these assets under a unified regulatory umbrella, the government intends to protect retail investors from potential platform failures and ensure transparency in the underlying physical holdings. While the discussions are ongoing, the move signals a broader effort to standardize the digital asset landscape within the Indian financial market.