SEBI Warns against Investing in Unregulated Digital Gold and E-Gold Products
Moneylife Digital Team 10 November 2025
Market regulator Securities and Exchange Board of India (SEBI) has issued a strong caution to the public against investing in so-called 'digital gold' or 'e-gold' products being offered by various online platforms. It clarified that these products are neither classified as securities nor regulated as commodity derivatives, meaning they operate completely outside SEBI’s purview and carry significant financial risks for investors.
 
In its public advisory, SEBI says it has come to its notice that several digital and online platforms are encouraging investors to buy 'digital gold' or 'e-gold' as an alternative to physical gold. The regulator stated that such digital gold products are not governed by any regulatory framework and are fundamentally different from SEBI-regulated gold products, such as exchange-traded commodity derivatives, gold exchange-traded funds (ETFs) offered by mutual funds and electronic gold receipts (EGRs) that are tradeable on recognised stock exchanges.
 
SEBI emphasised that investment in gold should be made only through these regulated channels and through intermediaries registered with the market regulator. These options are backed by established regulatory frameworks that provide transparency and investor protection. In contrast, digital gold products marketed online fall outside any such safeguards, leaving investors vulnerable to potential fraud and operational risks.
 
“Such digital gold products are different from SEBI-regulated gold products as they are neither notified as securities nor regulated as commodity derivatives. They operate entirely outside the purview of SEBI,” the regulator says in its statement. 
 
SEBI warned that investors in these unregulated products could face counterparty and operational risks and that none of the investor protection mechanisms under the securities market framework would apply.
 
Over the past few years, digital gold has gained popularity in India as several fin-tech firms, jewellers, and e-commerce platforms have started offering customers the option to buy small fractions of gold online. Many platforms promote digital gold as an easy and affordable way to accumulate gold, allowing customers to start with investments as low as Rs10 or Rs100. They often advertise convenient features such as round-the-clock buying and selling, instant storage in secure vaults and the option to redeem holdings for coins or jewellery.
 
However, there are concerns that such schemes operate in a regulatory vacuum. Since they are not governed by SEBI, Reserve Bank of India (RBI), or any other financial regulator, the safety of the investment depends entirely on the credibility and operational soundness of the private company offering the service. In the event that the platform shuts down, mismanages storage, or engages in malpractice, investors may find it difficult to recover their funds or physical gold.
 
SEBI’s latest advisory is part of its ongoing effort to inform investors about the risks associated with unregulated financial products. The regulator’s caution also follows the growing number of online financial offerings that claim to provide innovative investment opportunities but operate without formal oversight. 
 
SEBI reminded investors that only regulated financial instruments provide the necessary safeguards, including proper disclosure norms, grievance redressal mechanisms and monitoring by registered intermediaries.
 
Meanwhile, regulated gold investment avenues continue to attract growing investor interest. According to the World Gold Council, India’s gold exchange-traded funds saw about US$850mn (million) in net inflows in October, taking the total for the year to a record US$3.05bn (billion), the highest ever annual inflow. This demonstrates a clear preference among investors for transparent, regulated products over unverified digital offerings.
 
SEBI’s warning serves as a crucial reminder that while convenience and low entry barriers may make digital gold attractive, the absence of regulation leaves investors vulnerable to unnecessary risks. The regulator has urged the public to exercise due diligence and to verify the regulatory status of any platform before investing. For those seeking exposure to gold as an asset class, SEBI reiterated that Gold ETFs, EGRs and exchange-traded derivatives remain the only safe and regulated options available in India. 
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