Digital gold may soon face tighter rules in India, with the government considering a framework that could require digital gold sold to investors to be backed by physical bullion.
The proposal could also bring the sector under the possible oversight of the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI). However, these changes are still being discussed and are not final rules yet.
Why is digital gold facing new rules?
Digital gold has made buying small amounts of gold possible through online platforms. A person can purchase a small quantity digitally instead of keeping coins or bars at home.
But the product has operated outside SEBI’s securities-market framework.
In November 2025, SEBI warned investors that digital gold products were different from SEBI-regulated gold products and were not covered by the investor-protection mechanisms available in the securities market. SEBI also highlighted counterparty and operational risks.
That regulatory gap is now part of the wider discussion about how digital gold should be supervised.
What does physical backing mean?
The proposed approach is relatively straightforward.
If an investor owns a certain quantity of digital gold, the corresponding amount would need to be represented by physical bullion held in custody.
For example, if a platform records digital gold holdings for customers, the proposed framework could require equivalent physical gold to be maintained rather than relying only on internal records.
The exact rules for storage, audits and verification have not yet been finalised.
What could change for investors?
If the proposal becomes a formal framework, digital-gold platforms could face clearer requirements for how customer gold is held and accounted for.
That could include rules covering:
- Physical bullion backing
- Vault storage
- Regular audits
- Custody arrangements
- Customer records
- Redemption and ownership procedures
The important point is that these are areas being considered as part of the regulatory discussion, rather than requirements that investors can assume are already in force.
Why are RBI and SEBI involved?
Digital gold sits between several areas of India’s financial and commodities ecosystem.
SEBI already regulates products such as Gold ETFs and Electronic Gold Receipts. Digital gold, however, has not been treated in the same way.
The government is now seeking views from regulators, banks and other stakeholders on how the sector could be brought within a formal framework. Reports indicate that joint RBI-SEBI oversight is being considered.
Exactly which regulator would handle which part of the market remains an open question.
What happens to digital gold if the rules change?
A formal framework could make the relationship between digital holdings and physical bullion easier to verify.
It could also establish more consistent requirements for companies involved in selling, storing and managing digital gold.
For investors, one of the practical questions is what happens if a platform or intermediary faces financial problems. Clear custody and ownership rules could make that process easier to understand.
But until the final framework is announced, investors should not assume that proposed protections are already available.
How large is the digital gold market?
The Economic Times reported that the Indian digital gold industry manages around $3 billion in assets, showing how the product has moved beyond being a niche online offering.
Industry participants have also been working on self-regulation. In 2026, digital precious-metals companies formed the Digital Precious Metals Assurance Council of India, with a focus on standards around buying, selling, storage and physical backing.
This has added another layer to the broader discussion about formal regulation.
Is the new digital gold rule final?
No.
The government is currently considering possible changes and has sought input from relevant stakeholders. The proposal for physical backing and possible RBI-SEBI oversight is therefore best understood as a regulatory proposal under discussion, not a rule that has already taken effect.
What investors should watch next
The next important development will be the final regulatory framework, if and when one is introduced.
Investors will want to know how physical gold will be verified, who will oversee custodians, how audits will work and what protections will apply if a platform fails.
For now, the main change is not a new rule that investors must immediately follow. It is the government’s move toward examining a more formal structure for a rapidly growing digital-gold market.
Bottom line: Digital gold could eventually have clearer requirements for physical backing, custody and oversight in India, but the proposed RBI-SEBI framework has not yet been finalized.
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