The focus keyword “unregulated digital gold” hits the core of the issue: SEBI has cautioned investors that so-called “digital gold” or “e-gold” products being offered online may not be safe investment vehicles.
On 8 November 2025, SEBI released a statement (PR No. 70/2025) alerting the public that certain online platforms are promoting digital gold products which are neither notified as securities nor regulated as commodity derivatives. Such products therefore sit outside SEBI’s regulatory oversight.
What SEBI’s Warning Says
Here are the key points from SEBI’s advisory regarding unregulated digital gold:
- Digital gold / e-gold products are not the same as SEBI-regulated gold investments. They are not securities and not commodity derivatives.
- These products operate entirely outside SEBI’s purview
- Investor protection mechanisms that apply under securities market rules do not apply to these digital gold offerings. If something goes wrong, investors may have very limited recourse. mint
- SEBI specifically flagged the risks of “counterparty and operational risks” associated with such products.
Why This Matters for Investors
For someone considering investing, especially in India where gold is a popular asset, the advisory is important because:
- Many apps and platforms let you buy “fractional” digital gold (as low as ₹10) and advertise convenience, but this simplicity does not equate to regulatory safety
- Because the product is unregulated, in case of platform failure, fraud, or vault/warehousing issues, investor losses may not be covered.
- Some investors might have assumed digital gold offers the same safeguards as physical gold, gold ETFs or other regulated instruments—but SEBI makes clear that is not the case.
- With gold often viewed as a “safe-haven” asset, the risk is that investors may treat the digital version as equivalent, without appreciating the differences.
What Are the Safer Alternatives?
According to SEBI, if you’re looking to invest in gold with regulatory protection, you should consider:
- Gold ETFs (exchange-traded funds) offered by mutual funds.
- Electronic Gold Receipts (EGRs) traded on stock exchanges.
- Exchange-traded commodity derivative contracts in gold.
These are regulated instruments via SEBI-registered intermediaries, offering investor protection frameworks that unregulated digital gold platforms lack.
What Investors Should Do Right Now
If you’re holding or considering digital gold, here are practical steps:
- Check the platform: Is the product clearly regulated by SEBI, or is it a private platform offering “digital gold”?
- Read the terms: How is the gold held/warehoused? Who is responsible? What happens on redemption? Is there clarity on physical delivery?
- Evaluate risk: Understand that the digital gold offering may carry counterparty risk (if the issuer fails), operational risk (warehousing, storage, audit) and lack of recourse.
- Compare cost: Ensure you compare fees, spreads, redemption charges with other gold investment options.
- Consider alternatives: If you prefer regulated instruments with more transparency and protection, look at gold ETFs, EGRs, etc.
- Stay informed: Monitor for announcements from regulators like SEBI, and keep abreast of any changes in regulation or guidance.
Context: Why This Issue Has Emerged
- The trend of “digital gold” has grown strongly in India: mobile apps, fintech platforms, jewellers are partnering to offer users the ability to buy small quantities of gold digitally, redeemable (in many cases) as jewellery or coins. mint
- The ease of entry (small minimum investments, online accessibility) makes it appealing to retail investors.
- However, regulatory clarity has lagged: while physical gold, gold ETFs, commodity gold contracts are well defined, these digital models blur lines (is it a security? is it a commodity?).
- SEBI’s warning is part of regulatory efforts to prevent investor harm in areas where oversight is weak or ambiguous.
Possible Implications
- Investors may become more cautious about digital gold offerings; platforms might see reduced inflow or increased scrutiny.
- Platforms offering digital gold might need to improve disclosures, transparency, vault/wares auditing, or move toward regulatory compliance.
- The regulatory ecosystem might evolve: SEBI, the Reserve Bank of India (RBI), and the commodity regulator may consider formal rules for digital gold.
- Retail trust in “digital gold” could either weaken (due to perceived risk) or strengthen if platforms respond well with increased safeguards.
Conclusion
The bottom line: The focus keyword unregulated digital gold sums up the risk — these are digital gold or e-gold products offered online that are not regulated by SEBI and therefore carry significant investor risk. If you’re considering investing, you should proceed with caution, understand the product thoroughly, and weigh whether you’re comfortable with the lack of regulatory protections. As SEBI reminds: for regulated gold exposure, stick with instruments that lie within its framework.
