Sebi warns people against investing in digital gold products, flags risks

Markets regulator Sebi on Saturday warned investors against investing in digital or e-gold products, saying such instruments fall outside its regulatory framework and involve significant risks.

The cautionary statement came after Sebi observed that some online platforms have been promoting 'digital gold' or 'e-gold' products as an easy alternative to investing in physical gold.

"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 in a statement.

"Such digital gold products may entail significant risks for investors and may expose investors to counter party and operational risks," it added.

Sebi further clarified that investor protection mechanisms applicable to regulated securities will not extend to such unregulated digital gold schemes.

The regulator said that investors can gain exposure to gold through Sebi-regulated instruments such as Gold Exchange Traded Funds (ETFs) offered by mutual funds, exchange-traded commodity derivative contracts, and Electronic Gold Receipts tradable on stock exchanges.

Further, investments in these Sebi-regulated gold products can be made through registered intermediaries and are governed by the regulatory framework prescribed by the regulator, it added.