| Thursday, 27 November 2025 |
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Good morning [%first_name |Dear Reader%],
Over the years, 8 November has been a tumultuous date, marked by events like Modi’s demonetisation and Trump’s first-term election. This year, a circular by the Securities and Exchange Board of India (Sebi) on this date effectively washed the market regulator’s hands of digital gold. It made it known in no uncertain terms that these products do not come under its purview and cautioned investors to be careful.
It is informed that such digital gold products are different from SEBI regulated gold products as they are neither notified as securities nor regulated as commodity derivatives. They operate entirely outside the purview of SEBI. Such digital gold products may entail significant risks for investors and may expose investors to counterparty and operational risks.
Additionally, the circular made it clear that the investor protection mechanisms available in the securities market do not extend to these digital gold or e-gold products. A few days later, Sebi chairman Tuhin Kanta Pandey reinforced this stance, confirming that formal regulation for digital gold is not being considered. The regulator’s focus remains on gold-based investments through exchange-traded funds (ETFs) offered by mutual funds, electronic gold receipts tradeable on stock exchanges, and exchange traded commodity derivative contracts.
Safe to say Sebi’s hardline position would have made digital gold platforms like Safegold, Gullak, Jar, and MMTC-PAMP squirm. A vote of no-confidence by a regulator can be a game-changer in a not nice way, never mind their other positives.
The biggest selling point of these platforms that allow micro-investments in digital gold is the ease of investment and the smooth onboarding process on their apps.
As I wrote in my debut story for The Ken in January:
Digital gold, as it stands, is a mass-market product, with no brokerage or demat account needed to get going. Many of these platforms target customers in tier-2 or -3 cities. “Platforms like Jar and Gullak depend on low-friction onboarding to grow their customer base,” said an expert from the gold sector, pointing to the ease and speed with which accounts can be opened.
Since its launch in India in 2017, digital gold has seen remarkable growth, attracting over 120 million buyers. As of July 2024, more than 40 million people were holding it.
This momentum has only intensified in recent months. So, the timing of the circular was not surprising, as digital gold has been flying off the shelves. Sales through the United Payments Interface (UPI) transactions have been surging, with purchases in October alone exceeding Rs 2,000 crore, largely driven by festival buying on Dhanteras. Platforms facilitating these purchases serve a massive customer base; for instance, Gullak reported at least three lakh active transacting customers during a recent fundraise.
The trouble is the “counterparty and operational” risks that Sebi’s circular pointed to.
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