Is SEBI Warning Investors About Unregulated Digital Gold and E-Gold Products?
Click to start listening
Synopsis
SEBI has raised concerns about the rising trend of digital gold investments, highlighting that these products operate outside regulatory frameworks, which may expose investors to serious risks. Investors are urged to proceed with caution and consider regulated channels for gold investments.
Key Takeaways
- SEBI warns against unregulated digital gold products.
- Investors face significant risks with these offerings.
- Digital gold is not protected under SEBI regulations.
- Investments should be made through regulated channels.
- India's gold ETFs saw record inflows in October.
Mumbai, Nov 8 (NationPress) The Securities and Exchange Board of India (SEBI) has alerted investors about the risks associated with “digital gold” or e-gold products that are accessible online. These offerings are noted to operate outside the regulatory framework for securities, posing substantial risks for investors.
This scenario may lead buyers to face considerable counterparty and operational risks since these products do not fall under the category of securities or regulated commodity derivatives.
SEBI has observed that certain digital/online platforms are enticing investors to participate in ‘Digital Gold/E-Gold Products’. Digital Gold is being promoted as an alternative investment to physical gold, according to a statement from the market regulator.
It was clarified by SEBI that these digital gold offerings differ significantly from the gold products regulated by SEBI, as they are neither acknowledged as securities nor governed as commodity derivatives.
These products operate completely outside the jurisdiction of SEBI, which means they could expose investors to serious risks, including counterparty and operational challenges, as noted in the statement.
SEBI emphasized that none of the investor protection mechanisms available under the securities market will apply to investments in these digital gold or E-Gold products.
Numerous online platforms and jewellers are advertising digital gold with low initial investment thresholds, starting at Rs 10 or Rs 100. They also promote features such as the ability to buy/sell at any time and redeem for physical jewellery.
Investment in gold can be made through regulated avenues, which include exchange-traded commodity derivatives, gold exchange-traded funds from mutual funds, and electronic gold receipts that are tradable on stock exchanges. Such investments are managed by SEBI-registered intermediaries and fall under the regulator’s guidelines.
According to data from the World Gold Council, India’s gold exchange-traded funds experienced $850 million in net inflows in October, bringing the total to a record $3.05 billion—the highest for any single year.
Point of View
I firmly believe that investor awareness is paramount. SEBI's warning serves as a crucial reminder for all investors to adhere to regulated investment avenues. In an era of enticing digital offers, we must prioritize safety and credibility in our investment choices.
NationPress
09/11/2025
Frequently Asked Questions
What is digital gold?
Digital gold refers to a form of investment in gold that is bought and sold online, often marketed as an alternative to physical gold. However, it operates outside of regulatory frameworks.
What risks are associated with digital gold?
Investing in digital gold carries significant risks, including counterparty and operational risks, as these products are not regulated by SEBI.
How is digital gold different from SEBI regulated gold products?
Unlike SEBI regulated gold products, digital gold is neither classified as securities nor regulated as commodity derivatives, which means it lacks investor protections.
What investment options does SEBI recommend for gold?
SEBI recommends investing in gold through regulated channels like exchange-traded funds, commodity derivatives, and electronic gold receipts.
Why is SEBI warning about digital gold now?
SEBI's warning comes amidst a rise in online platforms promoting digital gold, which poses substantial risks to unsuspecting investors.
