CoinSwitch CEO Ashish Singhal Highlights Challenges In Gold-Based Stablecoin Idea In India

Gold-backed stablecoins have been part of broader global discussions around asset-backed digital currencies. In this context, Zerodha co-founder Nikhil Kamath, in a LinkedIn post, floated the idea of whether a gold-based stablecoin could help monetise unutilised gold held in Indian households and potentially generate yield, while also clarifying that he is not fully certain about the concept and was sharing it as an open thought.

Responding to the idea, CoinSwitch CEO Ashish Singhal said gold-backed stablecoins such as PAXG and XAUT already exist globally and represent a multi-billion-dollar market, with some platforms also offering returns linked to digital gold.

Gold-backed stablecoins are digital tokens linked to the value of gold, giving users digital exposure to gold, similar to fiat-backed stablecoins like USDT or USDC, but backed by gold instead of currency.

India’s Gold Structure Poses Key Challenge

He added that the bigger challenge is not the idea itself, but India’s underlying gold structure. “Most of India’s 25,000 tonnes of gold is not in standardised investment form,” Singhal said, highlighting the structural issue in India’s gold holdings.

While pointing this out, he noted that a large portion of the country’s gold exists as jewellery, family heirlooms, temple gold, and small household holdings, which makes it difficult to pool, verify, and store in a uniform investment-grade system.

Global gold-backed tokens such as PAXG require pure, investment-grade gold stored in regulated vaults, which differs significantly from the fragmented and diverse gold holdings typically seen in India.

Gold Does Not Generate Natural Yield, Says CEO

“There’s also another issue: gold doesn’t naturally generate income. So any returns on gold usually come from lending it out or financial structuring, which adds risk through intermediaries,” he said.

He added that any returns linked to gold are usually created through lending or financial structuring, which can introduce additional risk through intermediaries.

While the idea is directionally right, he added that making it work at India’s scale is far more complex than it appears at first glance, given the structural challenges involved and the fragmented nature of gold ownership across households and institutions.

He also raised a broader question on what kind of system could bridge this gap in a way that is simple, trusted, and suitable for everyday households, while ensuring transparency, security, and accessibility for users.