The India Bullion and Jewellers Association (IBJA) announced a major initiative to enhance market integrity and consumer confidence in India's rapidly expanding Digital Gold industry: the proposal to establish a dedicated, self-regulatory division.

This crucial step is intended to foster consumer trust and ensure market integrity, while proactively demonstrating effective self-governance to potentially pre-empt the need for external government regulation.

Key Components of the Proposed Initiative
The IBJA will formally establish a distinct Self-Regulatory Division (SRD) solely focused on the governance of digital gold. This division will be responsible for drafting the Self-Regulatory Framework (SRF), registering entities, and setting up the compliance monitoring and enforcement mechanism.

Consultative and Development Process
To ensure broad industry acceptance, IBJA's initial action will be to convene a Digital Gold Industry Consultative Meeting (DGICM). Key invitees will include major digital gold providers, custodians, consumer advocacy groups, and regulators for informational exchange.

Following the DGICM, IBJA will formulate a comprehensive Consultation Paper (CP) detailing proposed rules in critical areas, including:

• Custody Standards: Clear rules on minimum purity physical backing, insurance, and segregation of the underlying bullion.
• Consumer Protection: Rules on clear communication of risks, fees, and a defined grievance redressal mechanism.
• Compliance & Audit: Requirements for independent, periodic audits.

Framework Timeline and Enforcement
The Final Self-Regulatory Framework (F-SRF) is targeted for official publication by March 31, 2026. It is scheduled to become fully effective from April 1, 2026, onwards, allowing the industry a 4-month transition period to align systems and processes. Adherence to the F-SRF will be mandatory for all participating entities registered with the IBJA-SRD-DG.

Transparency and Audit Mechanism
A cornerstone of the F-SRF is transparency, aiming to eliminate public doubts about the physical backing of digital gold. The framework will mandate a quarterly independent audit of the physical gold reserves of all member entities.

• Auditor Requirement: Audit to be conducted by industry experience auditing firm.
• Transparency Portal: IBJA will establish a Digital Gold Transparency Portal to publicly display anonymized, aggregated compliance data and summaries of audit findings.

The SRD will have the authority to impose penalties, fines, and suspension for non-compliance with the audit mandate or the F-SRF rules.

Courtesy : AOJ Desk News