SEBI Issues Warning on Digital Gold Trading: What Investors Should Know
- Rajasekar Maruthasalam
- Nov 10
- 2 min read
Updated: Nov 11
The Securities and Exchange Board of India (SEBI) recently warned investors about the risks associated with buying digital gold through various online platforms. These digital gold products are different from SEBI-regulated gold investments like Gold Exchange-Traded Funds (ETFs) or Electronic Gold Receipts.
What Is Digital Gold?
Digital gold lets you buy gold in small amounts through apps or websites. While the platform claims to keep actual gold stored safely, these products are not regulated by SEBI. This means there is no official oversight to guarantee the gold's authenticity or to protect your investment in case something goes wrong.
Example: If you buy digital gold on an app and the company faces issues or fraud, you might have limited options to recover your money since there is no regulatory support.
How Is Digital Gold Different from Gold ETFs?
Gold ETFs are traded on stock exchanges and regulated by SEBI, which means your investment is protected under securities laws. To invest in Gold ETFs, you need a demat account, and trading happens during market hours. Although Gold ETFs don’t offer physical delivery, they provide transparency, liquidity, and security.
Feature | Gold ETF | Digital Gold |
|---|---|---|
Regulation | Regulated by SEBI | Not regulated by SEBI |
Investor Protection | Yes | No |
Trading Hours | Market hours only | 24/7 trading through apps |
Physical Delivery | No | Often available |
Account Requirement | Demat account required | No demat account needed |
Is Investing in Digital Gold Safe?
Investing in digital gold carries risks like counterparty risk (risk that the company may default) and operational risk (issues with platform management). Since there is no investor protection like in SEBI-regulated products, you should be cautious, especially if investing large amounts.
What Should Investors Do?
For long-term and safer gold investments, choose SEBI-regulated products such as Gold ETFs or Sovereign Gold Bonds.
Digital gold can be considered for small or short-term investments but be aware of the lack of regulatory protection.
Always verify the credibility of the digital gold platform before investing.
In summary, SEBI’s warning advises investors to understand that digital gold is different from Gold ETFs and does not come with the same protections. Choose your investment carefully based on your risk appetite and investment goals.
