Tokenised gold refers to physical gold that has been turned into a digital token, which is backed by a specific quantity of real gold stored in secure faults. Built on blockchain technology, these tokens allow investors to buy, sell or hold gold online without having to own or store physical bars or coins.
One of the biggest advantages of tokenised gold is fractional ownership, allowing investors to gain exposure to gold with very little money instead of buying expensive bars. Unlike traditional gold investments, the tokenised form of the asset can be traded round the clock on supported platforms, offering greater accessibility, liquidity and flexibility.
Features of tokenised gold
Tokenised gold is a blockchain-based digital token. Here are some of its features that investors must know before making an investment:
- Backed by physical gold: Each unit of tokenised gold is backed by an equivalent quantity of physical gold stored in independently audited and high-security vaults.
- Real-time verification: The token lives on a public blockchain, which means every transaction is verifiable in real time.
- Fractional ownership is allowed: This means you can own a fraction of a gram without spending too much money on buying a physical gold.
- No settlement delays: This asset trades 24 hours a day, seven days a week, without settlement delays.
- Newest form of digital asset: This is the newest and most infrastructure-rich form of gold exposure available
Risks associated with trading tokenised gold
Tokenised gold is a compelling asset, but it is not risk-free, and Indian investors need to understand the risks precisely, according to Prateek Gupta, Head of Business at Mudrex. Here are some of the risks he noted:
- Counterparty risk: The token is only as good as the issuer’s reserve management. If the custodian business fails, the token becomes worthless regardless of what the blockchain says.
- Platform risk: Smart contract vulnerabilities and exchange operational failures can lock access to your holdings at exactly the moment of market stress when liquidity is needed the most.
- Concentrated counterparty exposure: Investors remain exposed to a limited set of entities responsible for custody, issuance and redemption.
- De-pegging risk: There is a possibility that token prices may temporarily diverge from underlying gold prices during periods of extreme market volatility.
- Lack of mandated audits: While reputable providers may conduct voluntary audits, Indian law does not currently require a standardised third-party audit of tokenised gold reserves.
- No regulatory guarantee: The regulatory framework for tokenised gold remains evolving, creating uncertainty for investors. Additionally, SEBI’s investor protection mechanisms do not extend to these products.
- Tax implications: 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 the maturity exemption that SGBs offer.
Though the opportunity is genuine. entering this market without understanding the custodian, the audit schedule, and the tax implications is an incomplete investment decision, the expert said.
Who should consider investing in tokenised gold and how to buy it?
According to Gupta, tokenised gold is not meant for every investor. “The right investor is someone who already holds or understands crypto as an asset class, wants gold exposure with liquidity that physical gold and ETFs cannot offer.”
He added that one should also be ready to absorb the 30% VDA tax rate on gains. Hence, it is more suitable for those who want fractional access to gold, such as positions below one gram, without the cost burden of physical storage or the exchange-hours restriction of ETFs.
“It is also compelling for investors who want gold exposure that can be used across DeFi (decentralised finance) protocols as collateral,” he said.
If you depend on regulatory safety nets, need guaranteed interest income, or are within three to five years of retirement, tokenised gold is not the right instrument for your core gold allocation, he said.
For investors who do fit the profile, here is how to buy tokenised gold:
Step 1: Download the app that offers tokenised gold and create an account.
Step 2: Complete KYC verification, which requires a valid PAN, Aadhaar, and bank account details.
Step 3: Add funds to the platform’s wallet via UPI, IMPS, or NEFT.
Step 4: Search for PAXG (Pax Gold) or XAUT (Tether Gold) in the app’s marketplace.
Step 5: Enter the amount you want to invest and confirm your purchase.
Once you follow these steps, your tokenised gold holdings will appear in your wallet immediately without requiring any vault visits, demat accounts, or exchange hours as the position is live the moment the trade clears.
However, prospective buyers should note that account setup, KYC requirements, minimum investment amounts and transaction processes may vary across platforms. It is therefore advisable to review the specific requirements and terms of the platform before making an investment.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
About the Author
Eshita Gain is a digital journalist at Mint, where she joined in May 2025. She writes on corporate developments, personal finance, markets, and business trends, with a focus on delivering timely and relevant stories to a broad audience.
While her core beat lies in business and finance, she is not confined to a single niche and frequently explores stories across domains, including international relations and policy developments.
She holds a postgraduate diploma in business and financial journalism by Bloomberg from the Asian College of Journalism (ACJ), Chennai. During her time there, she received rigorous training in tracking financial data, interpreting corporate filings, and reporting on business developments. She has pursued her graduation from St. Joseph’s University, Bengaluru in a multi-disciplinary course. Her majors included Journalism, International Relations, peace and conflict studies.
Eshita has previously worked in digital marketing, which enables her to write SEO friendly copies that are clear and engaging.
Her primary interest lies in breaking down complex subjects and writing clear, accessible copies that inform readers. She aims to bridge the gap between technical financial language and everyday understanding.
Outside the newsroom, Eshita enjoys reading non-fiction, and exploring new places, constantly seeking fresh perspectives and stories beyond headlines.
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