New Delhi: The Securities and Exchange Board of India (SEBI) has sounded an alarm for investors, issuing a public advisory cautioning against investments in ‘Digital Gold’ or ‘E-Gold’ products that are being widely promoted across online platforms. The market regulator clarified that these instruments are not regulated by SEBI and therefore fall completely outside its legal and regulatory framework, leaving investors vulnerable to potential fraud and losses.
In an advisory titled “Caution to Public Regarding Dealing in Digital Gold”, SEBI highlighted that the regulator has already enabled several official, regulated avenues for gold investments, including:
• Gold Exchange Traded Funds (ETFs) offered by mutual funds,
• Exchange-traded commodity derivative contracts, and
• Electronic Gold Receipts (EGRs), which can be traded on recognized stock exchanges.
The regulator emphasized that these approved gold investment options are fully governed by SEBI’s framework and can be accessed only through SEBI-registered intermediaries.
“Investments in these regulated gold products are made through SEBI-registered entities and are governed by the regulatory framework prescribed by SEBI,” the advisory stated.
SEBI revealed that several digital or online platforms have begun promoting ‘Digital Gold’ and ‘E-Gold’ as convenient alternatives to buying physical gold. These products often allow users to buy fractional quantities of gold through apps or websites, which are then claimed to be stored by the seller on the buyer’s behalf.
However, SEBI clarified that these offerings are neither recognized as securities nor treated as commodity derivatives, and hence are not under SEBI’s jurisdiction.
“These so-called digital gold products are being marketed as substitutes for physical gold investment, but they are neither notified as securities nor regulated by SEBI,” the advisory explained. “Such products operate entirely outside the purview of SEBI.”
The regulator warned that unregulated gold schemes could expose investors to multiple risks, including:
• Counterparty Risk: The entity offering digital gold may default, disappear, or fail to honor its obligations.
• Operational Risk: Investors could lose their holdings due to weak technology systems, fraud, or platform shutdowns.
• No Legal Recourse: Since these products are not regulated, investors cannot seek help from SEBI or other securities market protection mechanisms in case of disputes or fraud.
SEBI reiterated that no investor protection mechanisms available under its regulatory framework would apply to those investing in digital gold products.
In recent years, the concept of digital gold has grown rapidly in India, particularly among young investors attracted by the convenience of online purchases and fractional ownership. Various fintech companies and e-commerce platforms have entered the space, offering easy access through mobile apps and digital wallets.
While such platforms often advertise storage and purity assurances, the absence of regulation means there is no guarantee of the gold’s existence, security, or redeemability. Cases of non-delivery and disputed ownership have surfaced in several instances, raising serious consumer protection concerns.
SEBI has urged investors to thoroughly verify the regulatory status of any gold investment platform before committing funds. It encouraged them to rely only on SEBI-registered and exchange-approved instruments, which offer both transparency and legal safeguards.
The advisory serves as part of SEBI’s broader initiative to curb misleading financial products that exploit investor ignorance under the guise of innovation.
Industry experts have lauded SEBI’s move, calling it a timely intervention as unregulated digital gold platforms continue to expand their reach. Financial analyst Ramesh Kumar observed, “While technology has made investing more accessible, it has also blurred the lines between legitimate and speculative products. SEBI’s warning is crucial to protect retail investors from deceptive schemes.”
The SEBI advisory underscores the growing need for financial awareness and regulatory discipline in the digital investment ecosystem. As more online platforms blur the boundaries between innovation and exploitation, investors must prioritize safety over convenience.
In essence, SEBI’s message is clear: If it’s not regulated, it’s risky. Investors looking to gain exposure to gold should do so through official channels like ETFs, EGRs, or commodity derivatives, where both transparency and investor protection are ensured.