Who Regulates Digital Silver in India?

A hundred rupees, three taps on an app, and you own a fraction of a gram of silver sitting in a vault somewhere. Convenient, certainly. But who regulates digital silver in India, and whose rules protect that hundred rupees? The honest answer: no statutory financial regulator directly oversees it. What exists instead is a self-regulatory body formed by the industry itself, the Digital Precious Metals Assurance Council of India (DPMACI), which sets voluntary standards for member platforms. This guide explains what digital silver is, where it stands legally, what DPMACI requires, how all this compares with a regulated Silver ETF, and the checks worth running before you put real money in.

What Is Digital Silver and How Does It Work?

Digital silver is a way to buy and hold silver online without taking delivery. When you purchase through a fintech app or platform, the provider is meant to hold 999-purity physical silver in an insured vault on your behalf, gram for gram against your balance. You can buy in tiny fractions, sell back at the live market price, or redeem your holding as coins or bars delivered home. No locker, no making charges, no shop visit. The convenience is real. The question is only what stands behind the promise that the metal is there.

The Regulatory Status of Digital Silver in India

Digital silver is legal to buy and sell in India. What it is not, is regulated the way securities are. Silver ETFs, which trade on stock exchanges, sit inside the securities framework with its disclosure, custody and audit rules. Digital silver does not, because it is neither notified as a security nor classified as a commodity derivative. The securities market regulator has publicly cautioned investors about products in this category, most recently in a November 2025 advisory concerning digital gold, and the same unregulated status applies to digital silver sold on the same platforms.

Into that gap stepped the industry. In May 2026, major platforms and bullion firms formed Digital Precious Metals Assurance Council of India (DPMACI) as a self-regulatory organisation for digital gold and digital silver, to introduce standardised practices in the absence of formal regulation.

Its members’ rules include:

• 1:1 physical backing, so every digital gram sold is matched by vaulted metal
• Storage in insured vaults meeting recognised good delivery standards, including LBMA-accredited holdings
• Periodic independent third-party audits matching vault stock to customer balances
• Customer funds run through segregated accounts monitored by an independent trustee
• A planned Ombudsman framework for grievance redressal within defined timelines

These are meaningful safeguards. They are also voluntary, binding only on members, and enforced by the industry rather than by law. That distinction should shape how much weight you place on them.

What the Securities Market Regulator Has Said

The regulator's position has been consistent: digital gold and silver products offered by online platforms are not securities, are not commodity derivatives, and therefore fall outside its jurisdiction. Its November 2025 public caution warned that the investor protection mechanisms of the securities market, formal grievance channels, mandated audits, custody rules, do not extend to these products. In short, it has not banned digital silver. It has told buyers, clearly, that they are on their own ground.

DPMACI: The Self-Regulatory Body for Digital Precious Metals

DPMACI brings together leading sellers and distributors of digital gold and silver under an independent chairperson, with a code of conduct all members must accept. Its core demands are the ones listed above: verified 1:1 backing, good delivery standards, independent custodians, trustee-monitored accounts and audit trails. A public portal sets out its governance standards. For a buyer, membership is a useful signal that a platform has accepted external scrutiny. It is not a government guarantee, and platforms outside the council are bound by none of it.

Digital Silver vs Silver ETFs: How Regulation Differs

Note: All figures are indicative. Actual amounts, fees, coverage percentages, and eligibility criteria may vary depending on the lender, borrower profile, loan category, and applicable guidelines at the time of application.

How to Evaluate a Platform Before You Invest in Digital Silver

If you choose the digital route, five checks separate the careful buyer from the hopeful one.

1. Check DPMACI membership. Membership means the platform has accepted audited 1:1 backing and custody standards. Absence of membership means you rely on the platform's word alone.
2. Read the custody disclosure. Who holds the silver, in which vaults, insured by whom. A serious platform names its custodian and publishes audit summaries.
3. Understand the spread and charges. Compare the buy and sell price on the same screen, and look for storage fees that begin after a period. These costs quietly decide your real return.
4. Test redemption terms. Confirm the minimum quantity, making and delivery charges for converting to coins or bars, before you need to.
5. Keep records. Save invoices and statements for every purchase. If a dispute ever arises, documentation is your case.

One more point of contrast with physical silver. Ornaments and eligible coins may be pledged with certain regulated lenders under **Reserve Bank of India directions on lending against gold and silver collateral, subject to applicable conditions. Digital silver balances are generally not accepted as collateral, as such rules recognise specific forms of physical metal rather than digital holdings

Conclusion

So the answer to who regulates digital silver in India comes in two parts. No statutory financial regulator does, and the securities market regulator has said as much in public. An industry council, DPMACI, now imposes audited standards on its members, which improves matters without changing the legal position. A buyer who understands that distinction can use digital silver sensibly: choose a member platform, read the custody and charge disclosures, keep records, and size the holding to what you could afford to have stuck in a dispute. Those wanting statutory protection to have the silver ETF route, and those wanting metal that can also back a loan have the oldest option, physical silver in hand.

Disclaimer : The information in this blog is for general purposes only and may change without notice. It does not constitute legal, tax, or financial advice. Readers should seek professional guidance and make decisions at their own discretion. IIFL Finance is not liable for any reliance on this content. Read more