SEBI Issues Caution on Digital Gold Investments: What Investors Need to Know

Mumbai, November 8, 2025: The Securities and Exchange Board of India (SEBI) has issued an important advisory (Press Release No. 70/2025) cautioning investors about dealing in so-called “Digital Gold” or “E-Gold” products that are being promoted through various online and digital platforms. SEBI has emphasized that such products are not regulated by the authority and therefore fall outside the protection framework available to investors under the securities market regulations.

SEBI-Regulated Gold Investment Avenues

To help investors make informed choices, SEBI clarified that it already facilitates investments in gold and gold-related instruments through a variety of regulated financial products. These include:

1. Gold Exchange Traded Commodity Derivative Contracts (ETCDs): These are standardized contracts traded on recognized stock exchanges, allowing investors to gain exposure to gold prices without owning physical gold.
2. Gold Exchange Traded Funds (ETFs): Offered by SEBI-registered mutual funds, Gold ETFs track the domestic price of physical gold and provide a secure, transparent way to invest in gold through the stock market.
3. Electronic Gold Receipts (EGRs): EGRs represent gold in electronic form and are tradeable on stock exchanges. They allow seamless buying and selling of gold in a regulated environment, backed by physical gold stored in accredited vaults.

All of these SEBI-regulated gold products can be accessed only through SEBI-registered intermediaries, ensuring transparency, investor protection, and adherence to regulatory standards.

The Concern: Unregulated Digital Gold Platforms

SEBI noted that several digital and online platforms have been offering products branded as “Digital Gold” or “E-Gold.” These platforms market digital gold as a convenient alternative to physical gold, often allowing customers to buy fractional quantities, such as 0.1 grams or 1 gram, and claim that the gold is stored on their behalf in secure vaults.

However, SEBI has clarified that these digital gold offerings are fundamentally different from the gold investment products that fall under its regulatory purview. Specifically:

• Digital gold is neither notified as a security under Indian securities laws.
• It is not classified as a commodity derivative under SEBI regulations.
• Consequently, SEBI does not oversee or regulate these products or the platforms that sell them.

Risks Involved in Digital Gold Investments

Because these digital gold products operate outside SEBI’s regulatory framework, they may expose investors to significant financial and operational risks, such as:

1. Counterparty Risk: Since there is no centralized or regulated exchange, the safety of the gold purchased depends entirely on the private entity offering it. If the company defaults, shuts down, or mismanages customer holdings, investors may lose their money.
2. Operational Risk: There is no standardized process to verify whether the gold purportedly “held” by the company actually exists or remains securely stored. Lack of third-party audits or independent verification increases risk.
3. Absence of Investor Protection Mechanisms: Unlike investments in SEBI-regulated products, where investor grievances can be addressed through mechanisms like SEBI’s SCORES platform, no such redressal framework exists for digital gold. Investors cannot avail themselves of SEBI’s investor protection measures.

SEBI’s Advisory to the Public

SEBI has urged investors to exercise caution and avoid dealing in unregulated digital gold products. The regulator reminded the public that investor protection mechanisms under SEBI’s jurisdiction do not apply to investments in digital gold or e-gold.

Investors seeking exposure to gold should only invest through SEBI-regulated avenues, such as:

• Gold ETFs (via mutual fund houses)
• Exchange-traded gold derivatives
• Electronic Gold Receipts (EGRs)

These options ensure transparency, regulatory oversight, and protection of investor interests.

Investor Takeaway

The growing popularity of digital gold platforms has blurred the line between convenience and compliance. While such platforms often promise easy access, instant liquidity, and storage-free ownership, SEBI’s latest caution highlights a critical point: if it’s not regulated, it’s not protected.

Before investing, individuals should verify:

• Whether the product is SEBI-regulated
• Whether the intermediary is registered with SEBI
• Whether there are clear, audited assurances regarding gold storage and redemption

Conclusion

SEBI’s Press Release No. 70/2025 serves as a timely reminder in an era of fintech-driven investments. Investors are encouraged to prioritize safety, regulation, and transparency over convenience and promotional promises.
Investing through SEBI-regulated gold instruments ensures not only alignment with legal frameworks but also the safeguarding of investors’ wealth from potential fraud or operational lapses.