National Stock Exchange (if) on 26 August directed its members including stock brokers to stop selling digital gold on its platform by 10 September. The direction came after SEBI said that some members are providing a platform to their customers to buy and sell digital gold.
“Around 8-9 per cent of the industry’s digital gold business comes through stockbrokers. There will be some effect after 10th September. SafeGold Managing Director Gaurav Mathur said the digital gold business is expected to decline by 5 per cent in FY22.
“As an industry player, I welcome SEBI to come up with guidelines to regulate trading of digital gold. This will create more trust among the customers,” Mathur said.
Several jewelers have announced their launch of Digital Gold in the upcoming festive season as the product is gaining traction amongst millennials and young customers.
Tanishq, Caratlane, Candere have tied up with SafeGold to sell digital gold this festive season. “We have tied up with 200 small jewellers, fintech firms, money remittance firms across Tier 2 and Tier 3 cities for our digital gold product and we will continue to add them,” Mathur said.
Now there are three digital gold players in the market – MMTC PAMP, Augmont and SafeGold.
“SEBI has not imposed any new restrictions, Section 8(3) of SCRR, 1957 is there for many years, they have reiterated the existing rules. They have clearly provided the ways and means for how third party products can be sold to end customers. SEBI has given guidelines for all unregulated products, be it trading in international stocks, trading in arts, real estate etc. There is hype about Digi Gold only because it is a growing product. Renisha K Chanani, head of research at Augmont Goldtech, said.
“All our partners are already complying with SEBI guidelines, there is no need to panic, as there is no restriction. The ban is only if you are not following the guidelines. Our customer base is a mix of customers first and foremost; Those who buy Digi Gold directly from our platform. Secondly, clients of our associate broking and fintech players,” said Chanani.
“While our sales volumes will not be impacted much on a year-on-year basis, there will be a slight decline in sales for broking customers in the short term,” said the Augmont executive.
Both SafeGold and Augmont said customers should rest assured that their gold is safe in their vault and that they can get delivery whenever they want.