Kochi: Even as doubts persist over whether companies actually hold physical gold equivalent to customer investments, digital gold is witnessing a sharp rise in popularity across India.

Despite warnings from the Securities and Exchange Board of India (SEBI), sales of digital gold and e-gold products through online platforms surged by 69% in 2025. During this period, Indians purchased around 13.5 tonnes (16.87 lakh sovereigns) of digital gold, valued at approximately ₹18,434 crore at current market prices. However, concerns remain over whether companies truly maintain equivalent physical gold reserves.

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Another key worry is the fate of such investments if a company shuts down. Many investors, particularly first-time and young users, continue to buy digital gold through apps without fully understanding the associated risks.

Convenience drives demand

The appeal of digital gold lies in its convenience, eliminating physical charges, storage issues, and enabling investments with as little as ₹10. The flexibility to buy and sell at any time has made it particularly popular among younger investors who use fintech platforms.

Regulatory concerns

SEBI has clarified that digital gold products fall outside its regulatory framework, warning that such investments may not be safe. While there are SEBI-regulated gold investment options, digital gold trading is not encouraged by the regulator.

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This also means that in case of fraud or disputes, SEBI cannot offer protection or redressal to investors. As a safer alternative, investors are advised to consider regulated products like Gold Exchange Traded Funds (Gold ETFs), which are traded through stock exchanges and backed by defined regulatory safeguards.

The World Gold Council (WGC) believes that demand for digital gold could grow further if the government introduces clear rules ensuring that companies hold physical gold equivalent to investments.

In the absence of formal regulation, the India Bullion and Jewellers Association (IBJA) has set up a self-regulatory framework for the sector, which is scheduled to come into effect from April 1.