SEBI Issues Warning Against Unregulated Digital Gold Schemes
The Securities and Exchange Board of India (SEBI) has cautioned investors against putting money into unregulated “Digital Gold” or “E-Gold” products offered through various online platforms.
Key Takeaways
- SEBI warns digital gold products operate outside regulatory oversight
- Investors face counterparty and operational risks with these schemes
- Only SEBI-regulated gold instruments offer proper investor protection
Regulatory Concerns
The market regulator clarified that while it permits gold investments through regulated channels like Gold ETFs, Electronic Gold Receipts, and commodity derivatives, most digital gold offerings fall outside SEBI’s jurisdiction.
This advisory comes as app-based gold investment platforms gain popularity, allowing users to buy fractional gold digitally. SEBI fears this trend might mislead investors about safety and regulatory coverage.
Significant Investor Risks
According to SEBI, these digital gold products—often marketed as convenient alternatives to physical gold—are neither classified as securities nor regulated as commodity derivatives.
“Such digital gold products may entail significant risks for investors and may expose investors to counterparty and operational risks,” SEBI warned.
The regulator emphasized that no investor protection mechanisms available under securities market regulations apply to these investments.
Safe Alternatives
SEBI advised investors to use only regulated instruments offered by registered intermediaries for gold investments. These provide transparency, regulatory safeguards, and protection against fraud or misuse.
