In a recent advisory, the Securities and Exchange Board of India (SEBI) has urged investors to exercise caution when dealing with online or digital gold investment platforms. As digital gold gains popularity as an easy and tech-driven way to buy and hold gold, SEBI has clarified that such products do not fall under its regulatory framework and therefore lack the investor protections available in SEBI-regulated gold products.
What SEBI said
According to the official statement:
“SEBI has enabled investments in gold and gold-related instruments through various SEBI-regulated gold products. These include exchange-traded commodity derivative contracts, Gold Exchange Traded Funds (ETFs) offered by Mutual Funds, and Electronic Gold Receipts (EGRs) tradable on stock exchanges. Investments in these SEBI-regulated gold products can be made through SEBI-registered intermediaries and are governed by the regulatory framework prescribed by SEBI.”
However, SEBI has noted that:
“Some digital or online platforms are offering investors to invest in ‘Digital Gold’ or ‘E-Gold Products’. Such digital gold products are neither notified as securities nor regulated as commodity derivatives. They operate entirely outside the purview of SEBI and may expose investors to counterparty and operational risks.”
The regulator further warned that:
“None of the investor protection mechanisms under the securities market framework shall be available for investments in such Digital Gold or E-Gold products.”
What is digital gold?
Digital Gold refers to online platforms that allow users to buy and hold gold virtually, usually backed by a promise that the equivalent quantity of physical gold is stored by a partner company. While convenient, these products are not regulated by SEBI or any other financial authority, meaning investors face risks such as fraud, storage issues, or disputes without formal recourse.
Investor advisory
SEBI advises investors to invest only through SEBI-registered intermediaries and regulated instruments like Gold ETFs, EGRs, or gold derivatives for safety, transparency, and protection.
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