SEBI Issues Warning: Significant Risks Associated with Unregulated Digital Gold Investment Products

Markets regulator SEBI has issued a strong warning to investors against putting their money into digital or e-gold products, highlighting that these instruments operate outside its regulatory framework and carry significant risks.

The cautionary advisory was released after SEBI noticed various online platforms promoting 'digital gold' or 'e-gold' products as convenient alternatives to physical gold investments.

"These digital gold products differ fundamentally from SEBI-regulated gold products as they are neither classified as securities nor regulated as commodity derivatives. They function completely outside SEBI's regulatory purview," the regulator explained in an official statement.

"Investors should be aware that such digital gold products may involve substantial risks and could expose them to counterparty and operational vulnerabilities," SEBI further warned.

The regulator clarified that the investor protection mechanisms that apply to regulated securities will not extend to these unregulated digital gold schemes.

For those interested in gold investments, SEBI recommends using regulated instruments such as Gold Exchange Traded Funds (ETFs) offered by mutual funds, exchange-traded commodity derivative contracts, and Electronic Gold Receipts that are tradable on stock exchanges.

Additionally, SEBI emphasized that investments in these regulated gold products can be made through registered intermediaries and are subject to the regulatory framework established by the regulator.