SEBI Flags Digital Gold Risks | 11 Nov 2025

Source: ET 

The Securities and Exchange Board of India (SEBI) has issued a strong advisory cautioning investors against investing in unregulated digital gold/e-gold products, highlighting their high risks and lack of investor protection.

• Key Risks Highlighted by SEBI: 
  • Unregulated Nature: Digital gold is not classified or regulated as a security or commodity derivative and lacks the investor protection mechanisms available for SEBI-approved products. 
  • Counterparty Risk: Investors rely entirely on the issuer, creating a high risk of default on physical gold or cash delivery. 
  • No Investor Protection: Market safeguards like insurance, grievance redressal, and guaranteed settlements do not apply, leaving investors without formal recourse. 
• Digital gold: It refers to buying gold electronically without physical possession, with its price linked to physical gold. Created using blockchain technology, it allows investors to buy, sell, and store gold online. 
  • It is easy to access, can be sold quickly in emergencies, and allows investment with small amounts.  
  • It removes storage hassles and can be converted into physical gold like coins, bars, or jewellery when needed. 
• Safer Alternatives: SEBI advises investors to use regulated gold investment options such as Sovereign Gold Bonds (SGBs), Gold exchange-traded fund (ETF), Electronic Gold Receipts (EGRs), and commodity derivatives. 
  • They offer regulatory oversight under SEBI, eliminate counterparty risk through guaranteed clearing, ensure transparent price discovery, and provide investor protection within SEBI’s framework.