The Securities and Exchange Board of India (SEBI) has issued a cautionary advisory to investors, warning them against investing in digital or e-gold products. The regulator stated that such products fall outside its regulatory framework and involve significant risks for investors.
The advisory comes amid the growing popularity of “digital gold,” which is being promoted by several online platforms as a convenient substitute for physical gold. SEBI clarified that digital gold does not qualify as a security or a regulated commodity derivative.
Digital gold allows investors to buy small quantities of gold online through apps or websites. The platform claims to hold an equivalent amount of 24K gold in insured vaults and provides users with a digital record of ownership. Investors can sell their holdings back to the platform or request physical delivery, often subject to fees.
However, digital gold lacks regulatory oversight and investor protection. It depends entirely on the platform’s credibility and may involve hidden costs. In contrast, regulated options such as Gold ETFs, Sovereign Gold Bonds (SGBs), and Electronic Gold Receipts (EGRs) offer safer and more transparent avenues for gold investment. Profits from selling digital gold are taxed as capital gains based on the holding period.
