Tokenised gold represents physical gold converted into digital tokens backed by real gold stored in secure vaults. According to reports from Mint, these blockchain-based tokens allow investors to buy, sell, or hold gold online without owning physical bars or coins. The asset offers fractional ownership capabilities, enabling investors to gain gold exposure with minimal capital compared to purchasing expensive physical bars. Unlike traditional gold investments, tokenised gold can be traded 24 hours a day, seven days a week without settlement delays, offering greater accessibility and liquidity. Recent developments show enhanced institutional-grade custody solutions with 99.99% purity LBMA gold backing each token, representing 1 troy ounce stored in reputable vaults in Asia with physical redemption options.
As reported by Mint, tokenised gold features include real-time verification through public blockchain technology, ensuring every transaction is verifiable in real time. Each token is backed by an equivalent quantity of physical gold stored in independently audited and high-security vaults. The asset offers no settlement delays and represents the newest and most infrastructure-rich form of gold exposure available. Unlike traditional gold investments, tokenised gold provides fractional ownership allowing investors to own a fraction of a gram without the cost burden of physical storage or exchange-hours restrictions of ETFs. Recent enhancements include compliant third-party custodians ensuring physical segregation of ownership, execution, and settlement, with institutional Multi-Sig approval workflows for enhanced security.
According to Prateek Gupta, Head of Business at Mudrex as reported by Mint, tokenised gold carries several risks that Indian investors must understand. Counterparty risk exists as the token's value depends on the issuer's reserve management, with custodian business failures making tokens worthless regardless of blockchain statements. Platform risk includes smart contract vulnerabilities and exchange operational failures that can lock access during market stress. The asset faces de-pegging risk where token prices may temporarily diverge from underlying gold prices during extreme volatility periods. Recent developments show enhanced security through institutional-grade cold storage with 98% of assets in air-gapped cold vaults located in Switzerland, Hong Kong, and Singapore, protected by FIPS 140-3 Level 3+ / CC EAL 4+ security standards.
As reported by Mint, tokenised gold in India is classified as a Virtual Digital Asset (VDA) and taxed at 30% flat on gains with no benefit of long-term capital gains rates or maturity exemptions that SGBs offer. The regulatory framework remains evolving, creating uncertainty for investors, and SEBI's investor protection mechanisms do not extend to these products. Additionally, there is no mandated audit requirement for tokenised gold reserves, though reputable providers may conduct voluntary audits. Recent regulatory developments show compliant brokerage frameworks providing direct access to licensed U.S. broker-dealers, offering applicable shareholder rights including dividends and voting privileges with competitive rates and zero commission.
According to Mint reports, tokenised gold is suitable for investors who already understand crypto as an asset class, want gold exposure with liquidity beyond physical gold and ETFs, and are ready to absorb the 30% VDA tax rate. The purchase process involves downloading a tokenised gold app, completing KYC verification with PAN, Aadhaar, and bank details, adding funds via UPI or IMPS, and searching for PAXG (Pax Gold) or XAUT (Tether Gold) in the marketplace. Recent developments show enhanced accessibility through institutional-grade platforms offering 1,000+ spot & contract trading pairs covering crypto, stablecoins, and derivatives with 24/7 near-instant USDT/USDC deposits & withdrawals. Investors should note that account setup, KYC requirements, and minimum investment amounts vary across platforms, requiring careful platform selection before investment.
