Summary of this article
The WGC expects the digital gold market to reach $160-170 billion by 2031
Trust, easier access, lower costs and new uses could drive wider adoption
Indian investors should assess physical backing, regulatory protection, redemption terms and applicable taxes
The global digital gold market could grow at an annual rate of 27 per cent to reach $160-170 billion by 2031, according to a report by the World Gold Council (WGC). The market is currently valued at $45-55 billion.
The report titled Digital Gold: Unlocking a $700-Billion Opportunity, published on October 19, highlights a gap between investor interest and actual adoption. Nearly nine in 10 investors surveyed said they would consider investing in digital gold if key concerns were addressed.
The WGC estimates that tackling these concerns could unlock up to $700 billion in potential demand. This is the total opportunity the report identifies, not a forecast for the market to reach that size by a specific year. In its base-case scenario, the market could grow to $160-170 billion by 2031. A more optimistic scenario puts it at $270-280 billion, while a slower-growth scenario estimates it at $70-80 billion.
The report is based on a survey of more than 12,000 retail investors across 12 markets, along with interviews with 20 industry experts. It identifies four key hurdles to wider adoption: trust, access, utility and cost.
What Could Drive Digital Gold's Growth
Trust is the biggest hurdle to digital gold's growth. Investors want to know whether their money is backed by physical gold, where the metal is stored and whether they can get it back when needed. The WGC says, "Customers will trust digital gold products more if they can sell easily and exchange the product for cash or the physical metal." Clearer regulations, transparent custody arrangements and easier redemption could help address these concerns.
Access is another barrier. The WGC says, "Digital gold must become easier to find and buy." In India, digital gold is already available through payment apps, super-apps and banking channels. More than 120 million customers in the country have engaged in digital gold transactions, the report said. Globally, 50 per cent of investors surveyed preferred buying digital gold through their main bank, compared with 27 per cent who favoured crypto trading platforms.
Digital gold could also become more useful if investors can earn returns on their holdings or use them to raise loans and make payments. The WGC identifies lending, collateral and payments as potential growth areas, though these services remain at an early stage. "Earning a yield is typically achieved by lending the product out or posting it as collateral," the report says.
Cost will also determine how quickly the market grows. Investors need to account for the difference between buying and selling prices, storage charges and physical delivery costs. The WGC says providers are finding ways to generate revenue beyond holding fees, which could help them offer more competitive prices. Lower costs, easier access and greater trust will be critical if digital gold is to reach a wider pool of investors.
Could Digital Gold Bring New Investors Into Gold
The WGC argues that digital gold could attract people who have not traditionally invested in the metal, rather than simply shifting money away from jewellery, coins, bars or other gold investments. Around 65 per cent of the estimated latent demand comes from people who do not currently invest in gold.
The survey found that 52 per cent of existing digital gold holders had not owned gold in any form before their first digital purchase. Of this group, 92 per cent later bought other forms of gold.
Younger consumers could also help expand the market. Awareness of digital gold stood at 50 per cent among respondents aged 25-34, compared with 23 per cent among those aged 55 and above, according to the report.
These findings suggest that the appeal of digital gold lies partly in making gold accessible to people who may not want to buy jewellery or larger quantities of physical bullion.
How Is Digital Gold Different From Other Gold Investments
Digital gold allows investors to buy fractional quantities of gold online, while a provider arranges for the corresponding physical metal to be held in a vault. Investors can generally sell their holdings through the platform or request physical delivery, subject to the provider's terms and charges. The investor therefore relies on the provider's custody arrangements and records.
Physical gold, by contrast, gives buyers direct possession of jewellery, coins or bars. They control how it is stored but must take responsibility for its safety. Making jewellery can also involve making charges, which are separate from the gold's market value.
Gold exchange-traded funds (ETFs) offer exposure to domestic gold prices through units traded on a stock exchange. Investors need a demat and trading account, and the funds operate within the Securities and Exchange Board of India’s (Sebi) regulatory framework. Electronic Gold Receipts (EGRs) are exchange-traded receipts representing gold held with an authorised vault manager, also within a regulated framework.
Sovereign Gold Bonds (SGBs) are different from all these options. They are government securities linked to the price of gold, rather than a claim to physical gold held for the investor. They have their own interest, maturity and tax rules. However, the RBI has discontinued fresh issuances amid the government’s efforts to reduce borrowing costs.
Tokenised gold is another form of digital gold. It represents gold ownership or a claim on gold through digital tokens, often on a blockchain. The rights attached to the token, the custody arrangements and the process for redeeming physical gold depend on the product. Tokenised gold should not automatically be treated as equivalent to gold held through a consumer app.
What Taxes Apply To Digital Gold
In India, digital gold is generally taxed like physical gold when it is treated as a capital asset. A 3 per cent Goods and Services Tax (GST) generally applies when it is purchased.
If the gold is sold within 24 months, the profit is generally treated as a short-term capital gain and taxed at the investor's applicable income-tax slab rate. If it is held for more than 24 months, the gain is generally treated as a long-term capital gain and taxed at 12.5 per cent without indexation, plus applicable surcharge and cess.
Sebi's Warning And The Regulatory Question
Sebi had earlier warned investors about digital gold in November 2025, saying such products were neither notified as securities nor regulated as commodity derivatives. It cautioned that investors would not receive the protections available under the securities-market framework and highlighted potential counterparty and operational risks. Sebi had also recommended that investors should consider regulated alternatives to digital gold, such as gold ETFs, commodity derivatives and EGRs.
According to The Economic Times report dated September 18, 2026, the government was discussing stricter rules for digital gold. These could include making physical backing mandatory and bringing the sector under the oversight of the Reserve Bank of India and Sebi. However, these were only discussions, and no final regulatory framework had been announced yet.
Digital gold offers convenient, low-ticket access to the metal, but it does not carry the same regulatory safeguards as gold ETFs or EGRs. Until the framework becomes clearer, investors need to examine who holds the gold, how its backing is verified and what happens if the provider runs into financial or operational trouble.
