SEBI digital gold warning, Digital gold investment: The Securities and Exchange Board of India (SEBI) has issued a public advisory warning investors against dealing in so-called ‘Digital Gold’ or ‘E-Gold’ products offered through various online platforms. The market regulator clarified that these offerings are not regulated by SEBI and fall entirely outside its purview.
SEBI digital gold circular
In its advisory titled ‘Caution to public regarding dealing in ‘Digital Gold’’, SEBI stated, “SEBI has enabled investments in gold and gold related instruments through various SEBI regulated gold products. These are exchange traded commodity derivative contracts, Gold Exchange Traded Funds (ETFs) offered by Mutual Funds and Electronic Gold Receipts (EGRs) tradeable on stock exchanges.”
SEBI registered digital gold
It further noted that investments in these regulated gold products can be made only “through SEBI registered intermediaries and are governed by the regulatory framework prescribed by SEBI.”
SEBI clarifies Digital Gold is unregulated
According to SEBI, it has come to the regulator’s notice that “some digital/online platforms are offering investors to invest in ‘Digital Gold/E-Gold Products’,” which are “being marketed as an alternative for investment in physical gold”.
Why SEBI banned digital gold?
However, SEBI emphasized that “such digital gold products are different from SEBI regulated gold products as they are neither notified as securities nor regulated as commodity derivatives.” The advisory warned that these products “operate entirely outside the purview of SEBI.”
SEBI’s warning for those investing in ‘Digital Gold’, ‘E-Gold’
The market regulator underscored the potential dangers of investing in these unregulated instruments, cautioning that “such digital gold products may entail significant risks for investors and may expose investors to counterparty and operational risks.”
It further reminded investors that “none of the investor protection mechanisms under securities market purview shall be available for investments in such Digital Gold/E-Gold products.”
