A Strong Caution to the Public
The Securities and Exchange Board of India (SEBI) has issued a strong warning to the general public about investing in digital gold or e-gold products available through various online platforms. The regulator clarified that these products are not recognized as government-permitted securities and therefore do not fall under SEBI’s regulatory jurisdiction.
Rising Gold Prices and Investor Frenzy
This caution comes at a time when global gold prices are hovering near their all-time highs, triggering a wave of enthusiastic buying across India. The regulator expressed concern that investors may be lured by the surge in gold prices and overlook the regulatory and operational risks associated with unapproved digital gold schemes.
No SEBI Protection for Digital Gold Buyers
SEBI emphasized that investors purchasing digital or e-gold will not enjoy any of the investor protection mechanisms currently available under SEBI’s supervision. In case of disputes, fraud, or operational lapses, no formal redressal mechanism exists for such investors since these instruments lie outside the securities market framework.
Regulated Alternatives for Safe Gold Investments
Contrasting the unregulated digital gold schemes, SEBI highlighted several safe and regulated gold investment options available under its purview. These include:
- Exchange Traded Commodity Derivative Contracts
- Gold Exchange Traded Funds (ETFs) offered by mutual funds
- Electronic Gold Receipts (EGRs) that can be traded on recognized stock exchanges
All of these instruments are governed by SEBI’s regulatory framework and can be accessed through SEBI-registered intermediaries, ensuring transparency and investor protection.
Unregulated Nature of Digital Gold Products
According to SEBI, many entities are currently marketing digital gold as a convenient alternative to physical gold. However, these products neither qualify as securities nor as commodity derivatives, placing them completely outside SEBI’s regulatory scope. Consequently, such products may expose investors to high counterparty and operational risks, as there is no standardized oversight or assurance regarding the underlying gold assets.
Who Sells Digital Gold in India
Digital gold is currently offered by several prominent players in India, including leading jewellery brands, a public sector undertaking (PSU) in collaboration with a Swiss firm, and multiple online jewellery retailers and e-commerce platforms.
How Digital Gold Works
To purchase digital gold, buyers typically log in to the seller’s online platform and can invest with amounts as small as ₹100. Upon purchase, the buyer receives an electronic receipt indicating the amount invested and the corresponding quantity of gold. Later, the buyer can either:
- Redeem the receipt for the cash value equivalent of the gold held, or
- Exchange it for physical gold jewellery, depending on the seller’s policies.
Final Advisory from SEBI
SEBI’s advisory underscores one clear message — investors must exercise caution before investing in digital or e-gold products. Since these products operate beyond SEBI’s supervision, investors are entirely responsible for their own risk exposure and should prefer regulated gold investment instruments for safety and transparency.
Related posts:
Australians are happy to use Super for financial advice
How to Apply for Shriram Union Gold Loan
GST 2.0: New Rates Start Today Across India
BSE Shares: Strong jump of 19%, shares at record high, such is the business health
IEX shares tumbled 12% on market coupling fears; is it time to exit this stock?
'Something big is going to happen in India!' Hindenburg's warning, whose turn is it now?
About the Author
