Dear Maa,

I know that ₹10 gold has piqued your curiosity – especially when all your friends are buying it. I also know that every time you ask me if you should buy it, I keep stalling you with a “Not yet, Maa.” I confuse you with legal jargon like “it is still unregulated” and you retort with, “So what?! It’s just 10 rupees!”

So, here is me, Maa – your one true free lawyer – finally breaking down the concept for you.

Firstly, it’s not you! It’s Digi-Gold! I totally understand the temptation of buying gold with just ‘one-click’ is hard to resist. The frenzy around it is real, data shows it. And why not? The app that once helped you pay electricity bills, now helps you hold gold digitally in a vault somewhere. And that too for the price of a cup of tea! Amazing, isn’t it?

But as a lawyer, when I look at any “simple” deal, I tend to look for the knots that may be hidden somewhere. And this product may have a few knots that I think you should have clarity over:

A. Who you’re dealing with:

Maa, when you’re buying gold from Apps like Google Pay, PhonePe, or PayTM, you think you’re buying directly from them, don’t you? But the truth is – you aren’t. They are just platforms – the front (App(s)). The actual “storehouse” where the gold sits, is a completely different entity (such as SafeGold, Augmont Goldtech or MMTC-PAMP) – (the Gold Provider).

The App is usually just a facilitator – its terms usually indicate limited (or no) liability in case there is any failure from the end of the Gold Provider. So, effectively you talk to the App, the App talks to the Gold Provider, and a few clicks and some payment transactions later, the Gold Provider credits digi-gold to you. If there’s any discrepancy in this transaction the App MAY say ‘Go talk to the Gold Provider,’ and the Gold Provider MAY say ‘It isn’t us, you may please talk to the App.’ And you get stuck in the messy contractual terms and conditions. Please beware of some language that reads as: “You agree that the App acts merely as a facilitator and is not responsible in case of any discrepancy in services” . Although this may not absolve them of all issues, but it may delay relief to you – so look hard Maa!

B. About Forced Exits:

I know you already know that digi-gold price generally diminishes the moment it is bought – thanks to the ‘buy-sell price gap’ (often called the ‘spread’) and GST. Multiple reports indicate that this digi-gold price depreciation may go up to 6% or even more. So, you being smart, think that if you hold it in the vault for as long as you can, you not only cover for the price loss, but make a profit with the surging gold price, right? Very Prudent!

However, what you should also know is that many digi-gold providers impose a time limit on vault storage and often charge additional ‘charges’ as well. Imagine you’re parking your car in a “free parking” lot. But the guard tells you, “You can park for free, but only until Saturday and when you leave, you have to pay 20% of the car’s value to open the gate.”

That should raise some eyebrows, right? That is exactly what the “Maximum Storage Period” clause does. Some Apps allow you to store gold for free for a specific time – let’s say 5 years. After that, the clock starts ticking. You’re forced to do one of two things: either sell it back to the Gold Provider (which means you pay the spread and may lose some profit %) OR take delivery by converting your digi-gold into physical gold. You decide to do the latter. This is where the math may get a bit more complicated.

Let’s say you bought ₹10,000 worth of digital gold today. Fast forward 5 years. Gold prices shoot up! Your digi-gold is now worth ₹15,000. You’re happy because you see a ₹ 5,000 profit.

Here’s the big ‘BUT’.

Now the App notifies you “Hey, your storage period ends in 5 days- either convert to physical gold OR sell it back to us and we’ll credit the amount to you”. You decide to convert that digital balance into a gold coin. The terms will say: “Sure! But to mint this into a coin, you must pay making charges (plus delivery charges)”. You pay ₹ 3,000 just to turn your digital gold into a coin. Your ₹ 5,000 profit suddenly shrinks to barely anything.

Sounds nothing like your real gold, right? Your locker at home doesn’t kick your jewelry out after 5 years, at least.

C. The issue of a ‘DigiGold Will’:

Maa, this is the point that worries me a bit. If something happens to you (God forbid), I know exactly where your physical jewelry is kept. But your digi-gold sits behind passwords, OTPs, and face locks. In the frenzy of easy buying, we often forget the exit route. Did you check if the App even has a clear nominee section? What is the time limit for your nominee to claim your asset? How and when can the transfer be refused? How long will the transfer take? If not transferred or claimed, what happens to your “unclaimed digital gold?” I know you buy gold as a legacy for us, Maa. But if the process to pass it on is locked behind obscure terms and invisible keys, that legacy may be difficult to reach us.

D. The ‘Unsecured Creditor’ Risk:

This is where the ‘unregulated’ aspect comes, Maa. For regulated products, you know you can seek respite from the regulator ultimately. And some products even come with insurances. For example, your Fixed Deposits – there’s some return insurance mandated by the regulator should anything happen to your money.  If the bank fails, the regulator steps in. So, you know you’re in safe hands.

Digi-Gold products neither have the grievance safety net nor the insurance safety net yet. And probably this is what the SEBI was warning us about. You aren’t buying gold from a regulated entity. You’re buying a private promise. If the Gold Provider goes bankrupt tomorrow, you become what we, lawyers, like to call an “Unsecured Creditor.” Effectively, you’ll be at the back of a very long line of creditors. The Gold Provider may first pay its employees, secured creditors, statutory dues, etc. And then, if there’s anything left, you and everyone like you. Unless, of course, if the Gold Provider has already appointed an independent trustee who legally segregates your gold separately from its assets and ensures it is safe.

So, what should you do – if you ask me?

Like most things in life, let’s act backwards. If your goal is just to develop saving habit, then DigiGold can work for you. But, if your goal is to invest, you may want to look at other investment options in the market. It all depends on what you’re looking for. But yes, I’d advise having clarity – no matter what you choose to do.

But the picture is not entirely bleak for your digi-gold either, Maa. Here’s what gives me some confidence: reports suggest that the India Bullion and Jewellers Association (IBJA) in December 2025 launched a Self-Regulatory Division that, by April 2026, seeks to mandate independent audits and more transparency for the users. If you ask, is self-regulation as strong as statutory regulation? I’d say no. But does it signal that the industry itself recognises the need for guardrails? Yes, of course!

And until the regulators decide to bring this product within its fold, that’s the protection you get.

Yours truly,

TechLegally.