In a recent cautionary advisory to gold investors, SEBI has urged investors to exercise caution when purchasing digital gold online from unregulated platforms.
SEBI has stated that it has observed numerous unregulated platforms selling ‘Digital Gold’ or ‘E-Gold’ products to investors. The regulator has clarified that these products do not fall under the securities market framework and lie entirely outside SEBI’s purview.
The practice of buying digital gold has gained popularity in recent years. With platforms offering investments starting as low as ₹10, investors are increasingly turning to digital gold for its accessibility.
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According to a SEBI press release, “It is informed that such digital gold products are different from SEBI-regulated gold products as they are neither notified as securities nor regulated as commodity derivatives. They operate entirely outside the purview of SEBI. Such digital gold products may entail significant risks for investors and may expose investors to counterparty and operational risks.”
SEBI has warned investors that, should anything go wrong or if a platform fails to deliver the gold or its equivalent amount, no investor protection mechanism will be available.
However, despite the regulator’s warning, Indian investors remain attracted to digital gold investments. A majority of investments in digital gold products come from younger generations and first-time buyers, drawn by the ease of purchase, convenience of avoiding physical store visits, and elimination of storage concerns.
Leading Platforms Selling Digital Gold
Currently, there are three major online gold product providers:
- MMTC-PAMP
- SafeGold
- Augmont Gold
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These vendors sell their products through popular platforms like Google Pay, PhonePe, Paytm, Amazon Pay, Groww, Airtel Payments Bank, and Jio Gold. Prominent jewellers such as Tanishq, Joyalukkas, CaratLane, and PC Jewellers also offer digital gold online.
Despite the brand reputation of these platforms, SEBI remains concerned about the lack of regulatory oversight. As an alternative to digital gold, investors can opt for SEBI-regulated instruments such as Gold Exchange Traded Funds (ETFs), Electronic Gold Receipts (EGRs), and exchange-traded commodity derivatives.
Since these instruments are backed by SEBI regulations, investors can seek recourse through government consumer protection mechanisms if needed.
