Digital Gold Market Could Hit $170 Billion
Why in News?
- On 20 October 2026, The Tribune reported a World Gold Council report, prepared with the Boston Consulting Group, projecting that the global digital gold retail market could reach USD 160-170 billion by 2031.
- The market is now about USD 45-55 billion, and the report puts potential growth at roughly 27 per cent a year over the next five years.
- The report names India, China and Indonesia as prominent centres of adoption and says India will remain a key market.
- Spot trading of tokenised gold exceeded USD 90 billion in the first quarter of 2026, more than the whole of 2025.
Key Terminologies
- Digital Gold
- A product that lets investors buy, trade and hold small amounts of gold backed by physical reserves kept with outside custodians. It offers fractional ownership instead of whole bars or coins.
- Tokenised Gold
- Gold ownership recorded as digital tokens, each linked to a quantity of physical gold. The report counts spot trading of tokenised gold in its volume figures.
- Custodian
- An institution that holds the physical gold on behalf of investors. The report says trust, transparency and custody issues must be settled to unlock more investment.
- Gold-Backed ETF
- A fund traded on an exchange that holds gold and issues units to investors. The report compares digital gold holdings of about 370 tonnes with these funds.
Key Issues
- Market Size: The global digital gold retail market is about USD 45-55 billion and could reach USD 160-170 billion by 2031 in the report's base case, which is growth of roughly 27 per cent a year.
- Faster Scenario: If barriers to adoption are removed quickly, the market could reach USD 270-280 billion by 2031, according to the report's accelerated scenario.
- Scale of Holdings: Digital gold holds about 370 tonnes of gold, roughly 8 per cent of worldwide gold-backed ETF holdings, and over 70 digital gold products have launched worldwide.
- Trading Surge: Spot trading of tokenised gold exceeded USD 90 billion in the first quarter of 2026, more than the full-year 2025 volume.
- Trust Gap: About USD 95 billion in new investment could flow into physical gold if suppliers resolve trust, transparency, custody and accessibility issues, the report says.
Key Implications
Positive/Pros/Merits
- Small Investor Access: Fractional ownership lets people with small savings buy gold, which widens participation.
- New Demand for Gold: The potential USD 95 billion of inflows into physical gold shows that digital products can add to, and not only replace, physical demand.
- Product Choice: More than 70 products give investors options, which can raise competition on fees and service.
- Liquidity: High tokenised gold trading volumes suggest buyers and sellers can transact easily, which is an inference.
Negative/Cons/Demerits
- Regulatory Gap in India: SEBI said in press release 70/2025 of 8 November 2025 that digital gold is neither a security nor a commodity derivative and operates outside its supervision.
- Investor Risk: SEBI listed counterparty and operational risks, including no regulatory safeguard if a seller defaults or shuts down.
- Custody and Transparency: The report itself says custody, trust and transparency issues are barriers, which shows that quality of backing is not yet assured.
- Projection Limits: The figures are scenarios in a report by the World Gold Council with the Boston Consulting Group, and the Tribune summary gives no India-specific market number, so India's share is unknown.
Key Initiatives
- Securities and Exchange Board of India: Press release 70/2025 of 8 November 2025 cautioned that digital gold and e-gold are not recognised securities and not commodity derivatives, so they sit outside SEBI's investor protection.
- Regulated Alternatives: SEBI pointed investors to Gold Exchange Traded Funds, gold exchange products and commodity derivatives on recognised exchanges, which fall under its supervision.
- Investor Advice: SEBI asked investors to verify whether a gold product is SEBI-regulated and to prefer authorised intermediaries and recognised exchanges.
SEBI says digital gold is not within its regulatory remit and has cautioned investors, pointing to regulated gold products as alternatives. The World Gold Council report calls for solving trust, transparency and custody issues. The reports reviewed describe no new Indian rule on digital gold in October 2026.
Director's Perspective
Way Forward
- Bring digital gold under a clear regulator, with rules on audited backing, so that every token or unit corresponds to physical gold.
- Require custodians to publish independent audits of holdings and insurance, which answers the trust and custody gap named in the report.
- Run investor education on the difference between digital gold and SEBI-regulated products such as gold ETFs.
- Publish India-level data on digital gold holdings and users, so that policy rests on figures and not on global estimates.
The report shows a fast-growing product that still lacks trust infrastructure. Strong growth, rising volumes and fractional access are real positives, while the regulatory gap in India and custody concerns are the weak points. In a Mains answer, credit the financial inclusion potential and the market growth, then conclude that audited backing and a clear regulator are needed before digital gold can safely scale.
GS Relevance
Frequently Asked Questions
How big could the digital gold market become by 2031?
A World Gold Council report prepared with the Boston Consulting Group says the digital gold retail market could reach USD 160-170 billion by 2031 in its base case, up from about USD 45-55 billion now. An accelerated scenario reaches USD 270-280 billion.
What is digital gold?
Digital gold is a product that lets investors buy, trade and hold small amounts of gold backed by physical reserves kept with outside custodians. It offers fractional ownership. SEBI said in November 2025 that such products operate outside its supervision.
Is digital gold regulated by SEBI?
Digital gold is not regulated by SEBI, according to its press release 70/2025 of 8 November 2025, because it is neither a notified security nor a commodity derivative. SEBI pointed investors to regulated alternatives such as gold ETFs.
PYQ Practice — Statement Analysis
1 SEBI regulates digital gold products as securities.
SEBI said in November 2025 that digital gold is neither a security nor a commodity derivative.
2 Digital gold holds about 370 tonnes of gold, roughly 8 per cent of worldwide gold-backed ETF holdings.
This figure is from the World Gold Council report covered on 20 October 2026.
3 Digital gold products offer fractional ownership backed by physical gold held by custodians.
This is how the report describes them.