New Delhi | November 10,2025 | Sky Link Times
The Securities and Exchange Board of India (SEBI) has issued a strong advisory cautioning investors against investing in unregulated digital gold or e-gold products offered by online platforms. The market regulator emphasized that such schemes operate outside its regulatory framework, leaving investors vulnerable to potential risks.
Table of Contents
Why SEBI Is Warning Investors
According to SEBI, several online and fintech platforms are aggressively promoting digital gold products as convenient alternatives to physical gold. However, these schemes do not fall under SEBI’s definition of securities or regulated commodity derivatives, meaning no investor protection mechanisms apply if issues arise.
1.Lack of Regulatory Oversight
Digital gold products are not recognised or supervised under SEBI’s current regulations. As a result, the usual safeguards available to investors in mutual funds, ETFs, or exchange-traded commodities do not apply here.
If a platform becomes insolvent or commits fraud, investors may not have legal recourse under SEBI’s framework.
2.Counterparty and Operational Risks
SEBI highlighted that these schemes carry significant counterparty risks—where the entity holding or promising the gold could default—and operational risks, such as unclear gold custody, lack of transparency, or audit failures.
3.Marketing Convenience vs Hidden Risks
Many platforms and jewellery brands market digital gold as an “easy” or “fractional” way to own gold through UPI or fintech apps. However, this marketing convenience can mask critical gaps such as:
Unclear gold backing or auditing
Limited redemption and liquidity options
Absence of regulatory supervision
Investors may wrongly assume these are safe, SEBI-approved investments, when they are not.
What Are the Safer, Regulated Alternatives?
SEBI urged investors seeking gold exposure to opt for regulated investment products, such as:
Gold Exchange Traded Funds (ETFs) offered by registered mutual funds
Electronic Gold Receipts (EGRs) tradable on stock exchanges
Exchange-traded gold derivatives under regulated frameworks
These instruments are monitored by SEBI and come with disclosure norms, custodial audits, and investor protection mechanisms.
What Investors Should Do Before Investing
Experts suggest investors follow a few basic checks before investing in digital gold:
1.Verify regulatory status of the platform or product.
2.Confirm physical gold backing and independent audits.
3.Understand redemption options—whether it can be converted to physical gold or resold easily.
4.Compare fees and prices with regulated options.
5.Avoid assumptions that small-ticket investments carry less risk.
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Expert Take
A senior SEBI official stated, “Investors should be aware that unregulated digital gold products are not covered under SEBI’s investor protection framework. They must carefully evaluate the risks before investing.”
Conclusion
As the popularity of digital gold investments grows across fintech and jewellery apps, SEBI’s warning serves as a timely reminder: ease of access does not mean safety. Investors should stay informed, verify regulatory backing, and prefer SEBI-approved instruments for long-term security.
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