SEBI Issues Strong Warning on Digital Gold Investments Amid Rising Popularity in India

The Securities and Exchange Board of India (SEBI) has issued a critical warning to investors across India regarding the risks associated with 'digital gold' or 'e-gold' products offered on several online platforms. This caution, officially released on November 8, 2025, highlights that while gold investment is available through various regulated avenues, most digital gold products fall outside SEBI's regulatory framework, potentially exposing investors to significant risks.

SEBI clarified that investments in gold can be securely made via regulated products such as Gold Exchange Traded Funds (ETFs), Electronic Gold Receipts (EGRs), and exchange-traded commodity derivative contracts facilitated through SEBI-registered intermediaries. These channels come with transparency, investor protection mechanisms, and regulatory safeguards that are absent in many digital gold schemes.

Digital gold operates by allowing users to purchase fractional gold amounts through websites or mobile apps. The providers claim to store the equivalent quantity of physical 24K gold in insured vaults and maintain a digital ledger for investors. Investors can purportedly sell their holdings back instantly or request physical delivery, often subject to fees and minimum limits.

However, SEBI emphasized that these digital gold products are neither recognized as securities nor regulated as commodity derivatives and thus lie completely outside its supervisory reach. The regulator identified that such investments might involve counterparty risks, operational uncertainties, and no protection under existing securities market investor safeguard frameworks.

The growing popularity of app-based gold purchasing platforms has prompted SEBI to caution investors not to assume these products come with the safety or protections of regulated financial instruments. SEBI strongly advised investors to channel their gold investments exclusively through regulated products offered by registered intermediaries to avoid fraud or misuse.

This advisory underlines the importance of understanding the regulatory status before investing, especially as digital gold continues to gain traction as a convenient alternative to physical gold ownership in India.