‘No investor protection cover’: SEBI alerts against Digital Gold sold by unregistered platforms
Experts familiar with SEBI’s advisory said the move was prompted by the rapid proliferation of digital gold offerings that have no underlying regulatory oversight or investor protection mechanisms.
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The Securities and Exchange Board of India (SEBI) has issued a strong advisory cautioning investors against investing in “digital gold” or “e-gold” products offered by unregulated online platforms. The regulator said these products are being marketed as an alternative to physical gold but operate completely outside SEBI’s regulatory framework, exposing investors to significant risks.
In its public statement, SEBI said it had observed that several online and digital platforms were offering digital gold investment opportunities. “Such digital gold products are different from SEBI-regulated gold products as they are neither notified as securities nor regulated as commodity derivatives. They operate entirely outside the purview of SEBI,” the regulator noted.
Experts familiar with SEBI’s advisory said the move was prompted by the rapid proliferation of digital gold offerings that have no underlying regulatory oversight or investor protection mechanisms. “The intent is not to discourage innovation in gold-linked products but to ensure investor protection and transparency. Many of these online offerings don’t even clarify who holds the underlying gold, leaving consumers exposed,” said a senior industry executive aware of the matter.
The regulator emphasised that none of the investor protection mechanisms under securities laws would apply to such unregulated digital gold products. “These offerings may expose investors to counterparty and operational risks,” SEBI said, urging the public to verify whether any investment product or intermediary is regulated before making transactions.
SEBI highlighted several regulated avenues for gold investment available under its purview — including Gold Exchange-Traded Funds (ETFs) offered by mutual funds, exchange-traded commodity derivative contracts, and Electronic Gold Receipts (EGRs) tradeable on stock exchanges. All of these instruments are governed by SEBI’s regulatory framework and can be accessed through registered intermediaries.
An executive at a leading mutual fund said SEBI’s move was timely given the rise in unregulated financial products. “Digital gold is being heavily promoted online without proper disclosures. Investors often assume these are SEBI-approved, which isn’t the case. This clarification was much needed to prevent confusion,” the person said, requesting anonymity.
Market experts believe the regulator’s warning reinforces the importance of due diligence. “Many retail investors are lured by easy app-based buying experiences, but they fail to realise they’re stepping outside the securities market safety net,” said another official with a financial advisory firm. “SEBI’s clarification will push investors toward safer, regulated instruments.”
The advisory comes as digital gold platforms have seen rising popularity among young investors and first-time buyers seeking small-ticket gold investments. With SEBI’s warning, industry watchers expect greater scrutiny of such products and possibly closer coordination between financial regulators to establish clearer oversight.
