The World Gold Council (WGC) has approached the Union Finance Ministry and the Reserve Bank of India (RBI) to establish guidelines and a regulatory framework for the burgeoning digital gold market in India. This initiative aims to safeguard consumer interests and promote transparency in digital gold transactions.
Need for Regulation
With over 120 million customers having bought digital gold and nearly 40 million currently holding it, the WGC emphasises the importance of a structured regulatory environment to protect these investments. The Council’s proposal includes the implementation of checks and balances to ensure the security of digitally purchased gold and to promote a transparent mechanism for buying and holding gold digitally.
Sachin Jain, regional CEO, India, WGC, stated: “There is a need to facilitate orderly growth of the digital gold market to protect and promote micro savings in gold through transparent digital gold channels and to deter any unscrupulous fly-by-night operators from misusing the emerging opportunity. Government should consider bringing out appropriate guidelines and regulatory oversight for a digital gold business aligned with the broader economic agenda on digitalisation of assets.”
Current Market Landscape
The digital gold market in India has seen significant growth, driven by increasing digitalisation and consumer preference for gold as a secure investment. A recent survey highlighted that 14% of Indian women still prefer gold as an investment over real estate and equities, underscoring the cultural and financial importance of gold in India.
In response to this growing market, fintech companies like Bengaluru-based Plus Gold offer platforms for purchasing digital gold. These assets, both physical and digital, are insured and securely stored by providers such as Augmont, the technology arm of RiddiSiddhi Bullions (RSBL).
Implications for Jewellers
The introduction of regulatory guidelines could have implications for jewellers and the broader jewellery industry. For traditional jewellers, this shift towards digital gold presents both challenges and opportunities. On one hand, it could divert some consumer interest away from physical jewellery purchases. On the other hand, it opens up new avenues for jewellers to engage with tech-savvy customers through digital platforms.
Ensuring that digital gold transactions are transparent and secure can build consumer trust and potentially expand the market. Jewellers who adapt to these changes and integrate digital gold offerings could benefit from increased customer engagement and diversified revenue streams.
