The Securities and Exchange Board of India (SEBI) has raised serious concerns over the growing popularity of digital gold investment platforms, warning investors about the potential risks and lack of regulatory oversight in this new-age investment product.
Digital gold has become a buzzword among Indian investors in recent years, offering the convenience of buying and selling gold online through mobile apps or websites. However, SEBI’s latest advisory has put a spotlight on the uncertainties surrounding such platforms, especially those not registered or monitored by any financial regulator.
What Is Digital Gold and Why Is It So Popular?
Digital gold allows investors to buy, sell, or hold gold virtually without having to deal with physical storage or security issues. The concept is simple — a buyer purchases a specific amount of gold online, and the equivalent quantity is supposedly stored in a secure vault by the service provider.
This option has attracted millions of Indians, particularly young and first-time investors, due to its low entry cost, convenience, and accessibility through fintech apps like PhonePe, Paytm, Google Pay, and others. Many people see it as an easy way to invest small amounts in gold — even starting with as little as ₹100.
However, as SEBI highlights, the problem lies in the fact that digital gold isn’t governed by any financial regulator — neither SEBI, RBI, nor any other government body. This makes investors vulnerable to fraud, mismanagement, and disputes with service providers.
SEBI’s Official Warning
In its advisory, SEBI clearly stated that investors must be careful when dealing with unregulated investment products, particularly digital gold schemes offered by non-registered entities.
The regulator noted that “digital gold products are not recognized as securities under the SEBI Act”, which means they do not fall under SEBI’s jurisdiction. As a result, SEBI cannot take action if something goes wrong — leaving investors exposed to significant risk.
This warning comes at a time when more digital platforms are aggressively marketing gold investment options without providing full clarity about who manages the physical gold and how it is stored.
What Makes Digital Gold Risky
Unlike mutual funds or government-backed gold bonds, digital gold is not regulated by any government authority. This means that if the company or platform storing the gold fails, shuts down, or defaults, investors may lose their money without any legal recourse.
There are also questions about storage security, purity, and ownership rights. In many cases, buyers don’t actually own physical gold; they merely hold a digital certificate or promise of gold ownership. If disputes arise, investors have very limited protection.
Moreover, several fintech apps partner with private gold trading companies, not banks or government bodies. SEBI’s concern is that these companies operate outside the financial regulatory framework, leaving investor safety in question.
Safe Alternatives Recommended by Experts
While digital gold seems convenient, experts and financial planners suggest that investors should instead focus on regulated and safer gold investment options, such as:
1️⃣ Sovereign Gold Bonds (SGBs): Issued by the Reserve Bank of India (RBI) and backed by the government, SGBs offer interest along with gold price appreciation.
2️⃣ Gold Exchange-Traded Funds (ETFs): Managed by SEBI-regulated mutual fund houses, these are transparent, easy to trade, and highly liquid.
3️⃣ Physical Gold & Hallmarked Jewellery: Although storage can be an issue, buying from trusted jewellers with BIS hallmark certification ensures quality and ownership.
Financial experts emphasize that if an investment isn’t regulated, it shouldn’t be trusted blindly, no matter how attractive it looks on advertisements or social media.
Rising Cases of Misleading Promotions
SEBI also pointed out that several digital gold platforms are promoting misleading claims, such as “guaranteed purity” and “government-approved storage,” which are often false or exaggerated.
To make matters worse, many of these platforms advertise during festivals like Diwali or Akshaya Tritiya, when gold purchases traditionally spike.
As a result, many unsuspecting consumers end up investing without understanding the risks involved.
The regulator has urged advertising agencies and influencers to act responsibly and avoid promoting unverified or unregulated investment schemes.
Investor Precautions
If you are considering investing in gold online, here are a few key points SEBI advises to keep in mind:
First, make sure the website or app you are using is registered with SEBI, RBI, or any other trusted authority. This helps you stay safe from fake platforms.
Second, always read the terms and conditions carefully. Check who actually owns and stores your gold.
Third, be careful of any offer that promises quick or guaranteed returns — those are usually scams.
Lastly, it’s better to invest through government-approved or SEBI-regulated gold schemes. They are safer for long-term savings.
In short, digital gold may seem easy and modern, but it also comes with real risks. If you’re not careful, you could lose your money or even the rights to your gold.