The Securities and Exchange Board of India (SEBI) has issued a public statement cautioning investors against dealing in ‘digital gold’ or ‘e-gold’ products by unregulated online platforms. The market regulator said such investments are not under its regulatory framework and may pose significant risks to investors.
“It has come to the notice of Sebi that some digital/online platforms are offering investors an opportunity to invest in ‘digital gold/e-gold products’. In this context, 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,” the regulator said.
Sebi said it has enabled several regulated options for investing in gold, including gold exchange-traded funds (ETFs) offered by mutual funds and electronic gold receipts (EGRs) traded on stock exchanges, and exchange-traded commodity derivative contracts. These instruments, Sebi said, are governed by its regulatory framework and can be accessed through Sebi-registered intermediaries. However, ‘digital gold’ products being sold online are not the same as Sebi-regulated gold products.
Such digital gold products may entail significant risks for investors and may expose investors to counterparty and operational risks,” Sebi noted in the release.
Sebi urged the public to be cautious and choose only Sebi-regulated instruments for gold investment. “Investors should verify whether the products and intermediaries they deal with are regulated by Sebi before making any investment,” it said.
The regulator further warned that investing in such unregulated digital gold could expose investors to ‘counterparty and operational risks’. “None of the investor protection mechanisms under the securities market purview shall be available for investments in such digital gold/e-gold products,” Sebi added.
