Sebi Warns Against Digital Gold: Should Investors Worry? Here’s What Experts Say
The Securities and Exchange Board of India (Sebi) has issued a strong caution to investors dealing in Digital Gold/E-Gold products offered by online platforms, reminding the public that these products are “unregulated” and operate entirely outside Sebi’s purview.
In its notification dated November 8, the regulator clarified that such offerings are not notified as securities nor regulated as commodity derivatives, and therefore do not qualify as Sebi-supervised investment products.
In simple terms, if any of these digital-gold platforms default or fail to honor investor holdings, there is no regulatory safety net or grievance mechanism under SEBI’s framework.
Instead, Sebi urged investors to stick with regulated and transparent gold avenues such as
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Exchange-Traded Commodity Derivative Contracts
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Gold Exchange-Traded Funds (ETFs) offered by mutual funds
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Electronic Gold Receipts (EGRs) traded on stock exchanges
“A Timely Caution for Investors” — Ranjit Jha, Rurash Financials
Ranjit Jha (CEO), Managing Director & Chief Executive Officer at Rurash Financials, told News18 that Sebi’s warning is a timely regulatory reminder for investors to stay aware of the hidden risks of unregulated platforms.
“In the absence of a regulatory mechanism, one cannot be sure if such offerings are backed by proper custody or redemption frameworks,”
He added that investors seeking gold exposure should choose regulated options like Gold ETFs, exchange-traded commodity derivatives, or Electronic Gold Receipts (EGRs)—all of which are governed by Sebi-registered intermediaries.
“For retail investors, Gold ETFs remain the most transparent and liquid choice. Convenience should never override regulatory safety in wealth creation.”
What Should Investors Do Now?
According to Aditya Agarwal, co-founder of Wealthy.in, investors don’t need to panic or rush to redeem, but they must review how and where their digital gold is stored.
“Sebi’s circular doesn’t claim every digital-gold platform is unsafe or fraudulent,”
“It merely differentiates regulated gold investments from unregulated ones. When a product lies outside Sebi’s framework, its standard safeguards and investor-protection mechanisms don’t apply.”
Practical Steps for Investors
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Check Transparency: Ensure the platform publishes independent third-party audit reports or vault certificates verifying the physical-gold backing.
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Verify Custodians: Confirm that vault partners are reputable and certified (e.g., Brink’s, Sequel Logistics).
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Prefer Disclosure: Select providers that clearly state audit frequency, custodian names, and trustee details.
If a platform lacks transparency or independent verification, consider redeeming or moving holdings to a more credible provider. Otherwise, investors may continue holding—but must stay alert to future regulatory updates.
The Bottom Line
Sebi’s warning underscores a broader truth—digital convenience should never come at the cost of regulatory safety. As India’s fintech ecosystem evolves, investors must prioritize transparency, custody integrity, and governance standards when choosing investment products.
For deeper insights into how Wealthtech innovation, advisory excellence, and regulatory transparency are shaping India’s financial-services future, explore perspectives from Ranjit Jha (CEO)—a pioneer in bridging technology with trust in wealth management.
To discover how Rurash Financials empowers clients through personalized investment strategies, AIF access, and digital wealth solutions, visit the official website.