The Securities and Exchange Board of India (SEBI) has issued an advisory urging investors to exercise caution before putting money into digital gold or “e-gold” products offered by online platforms, citing serious regulatory gaps and risks.
Key Highlights
- SEBI warns investors against unregulated digital gold platforms lacking legal oversight and investor protection mechanisms.
- Regulator advises public to invest only through SEBI-registered intermediaries offering gold ETFs or EGRs.
In its notification, SEBI clarified that many digital gold schemes are not classified as securities, nor are they regulated as commodity derivatives — and therefore fall completely outside SEBI’s regulatory jurisdiction. The regulator emphasised that these offerings do not benefit from the investor protection mechanisms typical of regulated financial products.
SEBI pointed out that while investors can safely participate in regulated gold-investment vehicles — such as gold ETFs, exchange-traded derivative contracts, and electronic gold receipts (EGRs) — such options are available only via intermediaries registered with Securities and Exchange Board of India (SEBI). In contrast, digital gold products offered through unregulated online platforms may expose investors to counterparty risk, custody risk, and operational risk, because of the lack of regulated oversight.
Also Read: SEBI Bars Mutual Funds from Investing in Pre-IPO Placements
Investors are therefore advised to verify whether the platform they are dealing with is regulated, whether physical metal backing is audited, and whether the product is structured under a recognised regulatory regime before committing funds.
