SEBI warns investors against unregulated ‘digital Gold’ schemes

MUMBAI: The Securities and Exchange Board of India (SEBI) has issued a public caution against investing in so-called “Digital Gold” or “E-Gold” products being offered on various online and digital platforms.

In an advisory, the market regulator clarified that while it has enabled investments in gold through regulated products such as Gold Exchange Traded Funds (ETFs), Electronic Gold Receipts (EGRs), and exchange-traded commodity derivative contracts, many online “digital gold” offerings do not fall under SEBI’s regulatory purview.

This latest advisory comes amid rising popularity of app-based and online gold investment platforms that allow users to purchase fractional quantities of gold digitally, a trend that SEBI fears may mislead investors about safety and regulatory protection.

According to the market regulator, these digital gold products — often marketed as convenient alternatives to physical gold — are neither notified as securities nor regulated as commodity derivatives. As such, they operate entirely outside SEBI’s oversight.

“Such digital gold products may entail significant risks for investors and may expose investors to counterparty and operational risks,” SEBI warned, adding that no investor protection mechanisms available under the securities market framework would apply to such investments.

The regulator pointed out that investors wishing to invest in gold should do so only through SEBI-regulated instruments offered by registered intermediaries, which provide transparency, regulatory safeguards, and protection against fraud or misuse. (ANI)