Mumbai: The Securities and Exchange Board of India (SEBI) has issued a stern warning to investors about the growing number of online platforms offering “digital gold” or “e-gold” products, cautioning that these investment avenues lie completely outside the country’s regulatory framework.
Outside SEBI’s Regulatory Purview
SEBI said it has come to its notice that several online platforms and jewellers are marketing digital gold as an alternative to physical gold. However, such products are neither notified as securities nor classified as commodity derivatives. As a result, they operate outside SEBI’s jurisdiction and lack the investor safeguards available under the securities market regulations.
The regulator warned that these unregulated instruments could expose investors to substantial counterparty and operational risks, as there are no established oversight mechanisms to ensure safety or fair practices. SEBI reiterated that investor protection measures applicable to regulated products do not extend to such digital gold investments.
Investor Protection Concerns
Many jewellers and fintech platforms attract small investors by allowing purchases starting from as little as Rs 10 or Rs 100 and highlighting convenience features like instant buying, selling, or redeeming gold for physical jewellery. However, SEBI cautioned that such offers may mislead investors into assuming they are protected by regulatory mechanisms similar to those for mutual funds or exchange-traded instruments.
The regulator advised investors to exercise caution and consider only SEBI-regulated gold investment channels such as gold exchange-traded funds (ETFs), exchange-traded commodity derivatives, or electronic gold receipts (EGRs) traded on recognised stock exchanges. These channels, SEBI noted, are facilitated by registered intermediaries and operate under defined regulatory oversight.
Growing Interest in Regulated Gold Investments
Despite the risks associated with unregulated platforms, interest in gold as an investment remains strong. India’s gold ETFs saw net inflows of USD 850 million in October, taking the total to a record $3.05 billion for the year — the highest ever, according to data from the World Gold Council.
