The NSE circular restricting its members from selling digital gold could potentially impact sales this year as it is an industry that is worth about Rs 5,000 crore annually. Stockbroking and fintech entities will have to stop selling digital gold from September 10 according to a report by the Economic Times. The instructions were conveyed in a circular issued by the National Stock Exchange of India (NSE). The NSE circular comes in the wake of the Securities and Exchange Board of India’s (SEBI) concern that digital gold sales by NSE members amounted to a breach of the Securities Contracts (Regulation) Rules (SCRR), 1957. Digital gold is on the rise in India with sales registering 70 percent growth during the pandemic. The World Gold Council said that India traded 4 to 5 tonnes of digital gold in 2019 with 25 lakh investors. The rise in popularity can be attributed to changing perceptions about the safety of digital gold, its cost vis-á-vis physical gold, and the liquidity it offers in times of financial stress. The investment asset, however, remains unregulated as it does not come under the purview of either SEBI or the Reserve Bank of India (RBI). The circular might impact digital gold sales which usually go up around August and September on account of certain Hindu festivals which are celebrated through gold purchases. India’s digital gold market A report in The Week explains that digital gold is a way of purchasing or trading physical gold that can be held digitally through online platforms. Once a…
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