NSE bans members from selling digital gold after Sebi flags concerns

In a letter dated August 3, the Securities and Exchange Board of India (Sebi) had informed the National Stock Exchange (NSE) to direct its members, including stockbrokers, to discontinue the buying and selling of digital gold by September 10. It said that the activity was in contravention of Securities Contracts (Regulations) Rules (SCRR), 1957. It also added that certain members of NSE are providing a platform to their clients to undertake such activities, PTI reported on Wednesday.

Stockbrokers to discontinue selling digital gold.

The SCRR rules only permits trading of securities or commodity derivatives, only as a broker or as a agent and not as a principal or employee. It restricts them from involving in any other business and not involve any personal financial liability. Also, the SCRR, under the definition of securities does not include digital gold.

TradeSmart Chairman Vijay Singhania said that there is no method to check whether the digital gold certificate is backed with physical gold or not. Some jewellers like Titan and banks were known for selling digital gold, he added. Further, digital gold units are not issued by any regulated entity, he said.

Motilal Oswal Financial Services, who were distributors of the digital gold product MMTC-PAMP will continue to be the owner of the product but will refrain from distribution of this product.