Industry experts have told us that the directive has reached the exchanges of the stock market regulator, the Securities and Exchange Board of India (Sebi). Therefore, the exchanges sent a circular to brokers to comply with the guidelines.

There are no regulations regarding digital gold. It is not regulated by Sebi as it does not fall under the jurisdiction of the Securities Contracts (Regulation) Rules, 1957. Therefore, Sebi does not want entities regulated by it to sell the product.

Digital gold has grown in popularity in recent years, as investors can buy gold, even worth one rupee, in this form. The product is sold through distributors, including stock brokers, investment platforms and mobile wallets.

There are currently three companies offering digital gold in India: Augmont Gold; MMTC-PAMP India Pvt. Ltd, a joint venture between the state-owned MMTC Ltd and the Swiss company MKS PAMP; and Digital Gold India Pvt. Ltd with its SafeGold brand. These companies sell the product through stock brokers, investment platforms and mobile wallets.

Now, stock brokers will stop selling digital gold, while wallets and platforms will continue to sell it.

So what will happen to existing clients who have invested in digital gold through these stock brokers? If you are a digital gold investor there is no need to panic as you can get out of your investments through your broker.

If you want to keep your investments, you will need to contact the manufacturer of the product directly, namely MMTC-PAMP, Augmont or Digital Gold India Pvt. Ltd after the deadline.

“We stopped selling the product after August 10, when we received the communication from the exchange to refrain from selling the product. Stock brokers have been given a month by the exchanges to close the product. Investors can continue to own or exit by selling gold or taking delivery of physical gold, even posting it directly from MMTC-PAMP. We communicated the same to investors who have invested in digital gold through us, ”said Kishore Narne, Managing Partner and Head of Commodities and Currencies, MOFSL, one of the digital gold distributors offered by MMTC. -PAMP.

“After September 10, investors will have to deal directly with MMTC-PAMP. The investor’s details are in any case registered with MMTC-PAMP. We provide free numbers for customers to contact MMTC-PAMP, ”he added.

In the case of digital gold investing, when an investor purchases digital gold, the manufacturer of the product purchases physical gold on behalf of the investors and keeps it in vaults operated by a third party. Gold is insured for any loss. The manufacturer charges around 3% spread (the difference between the rate of buying and selling gold) to the investor, with the exception of 3% goods and services tax.

“Customers should not be concerned if they have purchased digital gold from our partner authenticated intermediary and their digital gold is safe in our vaults. They don’t need to liquidate their position. Our partner intermediaries already respect the framework and the directives prescribed by the stock exchange and the regulator ”, declared Renisha Chainani, head of research, Augmont. However, if you are planning to invest in gold, you can explore other digital ways to invest in gold. which are better regulated like exchange traded funds (ETFs) and gold funds.

If you want to invest for the long term, gold sovereign bonds can be a good option as they not only offer the benefit of capital appreciation, but they also earn interest for the investor.