Market regulator SEBI has issued a strong cautionary advisory to investors regarding ‘digital gold’ and ‘e-gold’ specifically offered by unregulated online platforms. The watchdog emphasized that these popular investment alternatives operate entirely outside its regulatory framework and carry significant risks.
In a statement released on Saturday, the Securities and Exchange Board of India (SEBI) clarified that these digital gold offerings do not qualify as securities or commodity derivatives under current laws. Consequently, they do not fall under SEBI’s jurisdiction, meaning investors have no regulatory recourse if issues arise.
“Such digital gold products may entail significant risks for investors and may expose investors to counterparty and operational risks,” SEBI warned, noting that standard investor protection mechanisms available for regulated market instruments do not apply to these schemes.
Safer, Regulated Alternatives
For investors seeking legitimate avenues to invest in gold without holding physical metal, SEBI highlighted several regulated options that offer established safety nets. These include:
- Gold Exchange Traded Funds (ETFs) offered through mutual funds.
- Electronic Gold Receipts (EGRs) which are tradable on stock exchanges.
- Exchange-traded commodity derivative contracts.
The regulator advised that these approved products are governed by strict frameworks and can be securely accessed through registered intermediaries. SEBI urged all investors to perform due diligence and verify the regulatory status of both the product and the intermediary before committing any funds.
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