The recent advisory from the Securities and Exchange Board of India (Sebi) regarding digital gold has sparked concerns among investors regarding the safety of these widely-used online platforms for purchasing gold. Sebi has emphasized that several digital gold products offered by apps and fintech companies are not under its regulatory oversight, potentially exposing investors to unfamiliar risks.
Digital gold, which is often marketed as a convenient method to buy small quantities of gold online, enables users to buy, store, and sell gold through apps without physical possession. However, Sebi’s latest notice on November 8, 2025, has highlighted that most of these products operate without regulation, lacking oversight from financial authorities like Sebi or the Reserve Bank of India.
The purpose of Sebi’s alert is not to prohibit digital gold but to educate investors on the risks involved. These risks primarily stem from the absence of regulatory scrutiny. Since Sebi does not classify digital gold as a security or commodity derivative, it does not monitor how these companies manage investors’ funds or the physical gold purportedly backing each transaction.
Abhishek Kumar, a Sebi-registered investment advisor and founder of SahajMoney, pointed out that the lack of regulation makes it challenging to distinguish between safe and risky digital gold platforms. There is a potential for counterparty and operational risks, including the failure to deliver gold, defaults on redemption, and uncertainty about the actual existence and security of the gold.
Sebi’s caution underscores these concerns by noting that digital gold products operate beyond its oversight, leaving investors without the protection mechanisms provided by securities laws. In light of these developments, investors are contemplating whether to retain their investments in digital gold.
Abhishek Kumar recommends exercising caution and transferring digital gold holdings to regulated gold products like Gold ETFs or Electronic Gold Receipts traded on stock exchanges, as these are overseen by Sebi. Unlike digital gold platforms, Gold ETFs and EGRs offer transparency, investor safeguards, and legal recourse in case of issues.
While digital gold gained popularity due to its convenience and accessibility for small investments, Sebi’s warning stresses the importance of safety over convenience. Investors should understand the distinction between regulated and unregulated gold products. While digital gold may still serve short-term or convenience purposes, long-term investors are advised to consider Sebi-regulated gold products for enhanced security and transparency.