Investors alerted: SEBI flags risks in unregulated digital gold products

India’s securities regulator, SEBI, has cautioned investors against purchasing “digital gold” or e-gold products offered through online platforms. These offerings function without regulatory oversight, leaving investors vulnerable to substantial financial and logistical risks since they are not classified as securities or commodity derivatives.

SEBI clarified that such products differ fundamentally from its regulated gold investment alternatives like commodity derivatives or gold ETFs. “Digital gold platforms operate entirely outside SEBI’s jurisdiction, eliminating access to investor safeguards typically available in regulated markets,” the regulator stated.

SEBI highlighted concerns about aggressive marketing tactics, noting that platforms often lure users with features like micro-investments (as low as ₹10), instant transactions, and physical gold redemption. The regulator advised investors to instead consider secure alternatives such as SEBI-regulated gold exchange-traded funds (ETFs), commodity derivatives traded on exchanges, or electronic gold receipts listed on stock exchanges.

Demand for regulated gold products remains strong—India’s gold ETFs recorded ₹24,300 crore ($3.05 billion) in assets by October 2023, marking the highest annual inflows to date according to World Gold Council data.

(Inputs from IANS)