Description

SEBI warns investors that digital gold products are not regulated securities and operate outside SEBI's purview, exposing investors to significant counterparty and operational risks without investor protection mechanisms.

Summary

SEBI has issued a public caution regarding investments in ‘Digital Gold’ or ‘E-Gold Products’ offered by digital/online platforms. These products are not regulated by SEBI, are neither notified as securities nor regulated as commodity derivatives, and operate entirely outside SEBI’s regulatory framework. Investors are warned that such products entail significant counterparty and operational risks, and no investor protection mechanisms under securities market purview are available for these investments.

Key Points

  • Digital Gold products marketed as alternatives to physical gold are not SEBI-regulated
  • These products are neither securities nor commodity derivatives under SEBI’s regulatory framework
  • Digital Gold operates entirely outside SEBI’s purview
  • Investors face significant counterparty and operational risks
  • No investor protection mechanisms available for Digital Gold investments
  • SEBI-regulated alternatives exist: exchange traded commodity derivatives, Gold ETFs by Mutual Funds, and Electronic Gold Receipts (EGRs) tradeable on stock exchanges

Regulatory Changes

No new regulatory changes introduced. This is a public awareness notice clarifying that Digital Gold products fall outside SEBI’s regulatory jurisdiction.

Compliance Requirements

No specific compliance requirements. This is an investor advisory notice.

For Investors:

  • Be aware that Digital Gold investments are unregulated by SEBI
  • Understand that investor protection mechanisms do not apply to Digital Gold
  • Consider SEBI-regulated alternatives: commodity derivatives, Gold ETFs, or EGRs through registered intermediaries

Important Dates

  • November 08, 2025: Public caution issued

Impact Assessment

Investor Impact: High - Investors currently holding or considering Digital Gold products need to reassess their risk exposure as these investments lack regulatory oversight and investor protection mechanisms available in SEBI-regulated markets.

Market Impact: Medium - May redirect investor interest from unregulated digital gold platforms to SEBI-regulated gold products including Gold ETFs, commodity derivatives, and Electronic Gold Receipts, potentially increasing volumes in regulated gold investment vehicles.

Operational Impact: Low - No operational changes required for regulated entities. Advisory serves to educate public about risks of unregulated products.

Impact Justification

High severity public warning about unregulated digital gold products that expose investors to significant risks without SEBI protection mechanisms. Critical for investor awareness and protection.