New Delhi: The Securities and Exchange Board of India (Sebi) has issued a public warning urging investors to exercise caution when investing in unregulated products such as digital gold and other gold-related online offerings.
In an official release, the capital markets regulator said it had observed several online platforms promoting digital or e-gold products as alternative investment options to physical gold.
“It has come to the notice of SEBI that some digital/online platforms are offering investors to invest in ‘Digital Gold/E-Gold Products’. Digital Gold is being marketed as an alternative for investment in physical gold,” the regulator stated.
Sebi clarified that these products are not recognised as securities and do not fall under the category of commodity derivatives. As such, they are outside the regulatory purview of Sebi, and investors will not be covered by any investor protection mechanisms available under the securities market framework.
“Investors/participants are made aware that none of the investor protection mechanisms under securities market purview shall be available for investments in such Digital Gold/E-Gold products,” the regulator said.
However, Sebi highlighted that investors seeking exposure to gold can do so safely through regulated instruments such as exchange-traded funds (ETFs) and mutual funds. These options, offered through Sebi-registered intermediaries, are governed by the regulator’s prescribed framework and offer investor safeguards.
“Investments in Sebi-regulated gold products can be made through Sebi-registered intermediaries and are governed by the regulatory framework prescribed by Sebi,” the statement added.
Meanwhile, according to data from CaratLane, a Tata Group company, a growing number of platforms now offer mobile-first digital gold options, enabling users to buy gold via smartphone apps. Digital gold allows individuals to purchase small quantities of gold online, which are claimed to be backed by physical gold stored in secure, insured vaults.
CaratLane explains on its website that such products “allow you to invest and track your holdings digitally, with the flexibility to redeem them as coins or jewellery.”
Popular platforms such as PhonePe, Google Pay, and Paytm, in partnership with SafeGold, CaratLane, Tanishq, and MMTC-PAMP, currently provide customers with the option to invest in digital gold.
Financial experts have also cautioned that purchases of digital gold attract Goods and Services Tax (GST), capital gains tax, and short-term gains tax, which investors should factor into their decisions.
