Digital gold may come under RBI, SEBI oversight: What physical gold backing could mean for investors

The government is considering tighter rules for digital gold , including mandatory physical bullion backing and possible oversight by RBI and SEBI. The proposals are still under discussion, but could change how digital-gold platforms operate and how investors are protected.

Digital gold could soon move closer to a formal regulatory framework, as the government examines ways to bring the fast-growing investment product under regulatory oversight.

The finance ministry has sought views from regulators, banks and other stakeholders on tighter rules for digital gold, including a proposal that every unit sold to investors should be backed by an equivalent quantity of physical bullion. Joint oversight by the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) is also being considered, according to a report by The Economic Times.

The discussions are still at the proposal stage. No final RBI or SEBI regulation for digital gold has been announced.

Digital gold allows investors to buy small quantities of gold through online platforms, sometimes starting with as little as ₹ 10 or ₹ 100. The platform or its bullion partner typically represents the investment as gold held in physical form in a vault.

The proposed framework could make such backing a formal regulatory requirement rather than leaving it primarily to the arrangements between platforms, custodians and bullion providers.

According to ET, stakeholders have also suggested that digital gold should be recognised as a security under the Securities Contracts (Regulation) Act, 1956. The industry is estimated to manage around $3 billion of assets, with an average transaction size of about ₹ 100.

For investors, the significance is not merely about whether there is gold in a vault. A formal framework could establish clearer requirements around ownership, custody, audits, redemption and reporting.

The proposed regulatory changes come after SEBI cautioned investors about digital gold in November 2025.

SEBI said digital gold and e-gold products offered through online platforms were different from regulated gold products such as gold ETFs , exchange-traded commodity derivatives and electronic gold receipts. Since digital gold was neither notified as a security nor regulated as a commodity derivative, it operated outside SEBI's regulatory framework.

More importantly for investors, SEBI said the investor-protection mechanisms available under the securities-market framework did not apply to digital gold. It also flagged potential counterparty and operational risks.

This distinction is important. Buying digital gold through an app does not currently make the investment equivalent to buying a gold ETF through a SEBI-regulated intermediary.

If the proposed framework is implemented, investors could see greater standardisation in how digital gold is held and accounted for.

A requirement for physical backing could mean that platforms need to demonstrate that the gold represented in customers' digital holdings actually exists in designated vaults.