![]() MMTC’s offering was a joint venture with PAMP, a Swiss gold refiner. Originally, digital gold was offered only by Metals and Minerals Trading Corporation of India (MMTC), a public sector undertaking. An email query sent to Sebi is yet to be answered. Our circular is essentially aimed at ring-fencing regulated entities," the official added. If something goes wrong, even the regulated environment will get impacted. “Currently, digital gold is being offered in a regulatory vacuum. So, digital gold is not much of a stretch," said the second person cited above. “Essentially, all the gold trading on exchanges is anyway under us. Then, digital gold would become regulated and all RIAs, brokers and their connected entities would be able to offer digital gold," said the first of the two officials cited above. “The only way around this is if digital gold is termed as securities by an amendment to the Securities Contract Regulation Act (SCRA) and Sebi Act. In response to all this confusion, Sebi has recommended to the government that digital gold offerings should be termed as securities in the upcoming Union budget, according to two people aware of the matter. On the other hand, a few firms are planning to write to the regulator for greater legal clarity. On the one hand, there is a growing number of fintech companies that are rejigging their structures and hiving off their digital gold business into a separate entity. ![]() The threat of license cancellation has already had a multiplier effect. If found doing so, the market regulator can impose monetary penalties, ask the firms to refund the invested money to clients along with interest and, in the worst case, even cancel their Sebi registration. In effect, fintech companies such as Paytm or Groww, which hold a Sebi RIA registration, could earlier offer crypto or digital gold as part of financial plans to their clients. The new restrictions have come soon after an advisory was issued by the stock exchanges in August this year, which prohibited stockbrokers from distributing digital gold on their platforms after 10 September. The differential rules have understandably begun to cause much heartburn within the fintech industry. ![]() “We had no choice but to shut down, while others are continuing to make money," he added. Entities regulated by the Reserve Bank of India (RBI) and other unregulated firms can continue to offer digital gold," the CEO quoted above said. “We are at a stage of total regulatory arbitrage.
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