The Securities and Exchange Board of India (SEBI) has once again cautioned investors against investing in ‘Digital Gold’ or ‘E-Gold’ products offered by unregulated online platforms.
Despite gold being one of the top-performing asset classes in 2025, SEBI warned that such products are not covered under its regulatory framework and may expose investors to significant risks.
In a statement issued on 8 November 2025, SEBI said it has observed that certain digital platforms are marketing ‘Digital Gold’ or ‘E-Gold’ as an alternative to physical gold. The regulator clarified that these products are neither notified as securities nor regulated as commodity derivatives, meaning they function outside SEBI’s purview.
According to SEBI, “Such digital gold products may entail significant risks for investors and may expose investors to counterparty and operational risks.” It further emphasized that no investor protection mechanisms available under securities laws would apply to these investments.
SEBI advised investors to opt for regulated gold investment avenues. These include:
All these products fall under SEBI’s regulatory framework and can be accessed through SEBI-registered intermediaries.
This is not the first time SEBI has raised concerns about digital gold. In 2021, the regulator barred registered intermediaries such as investment advisers and brokers from offering or recommending digital gold products. Following this, both the NSE and BSE directed their members to stop dealing in such products, citing regulatory gaps.
Digital gold refers to the online purchase and storage of gold, eliminating the need for physical possession. Introduced in India around 2012–13, this system involves an importer storing bullion in vaults and a fintech distributor offering the product to investors via apps. These platforms allow purchases in small denominations — often starting from ₹1 to ₹10 — and the gold is typically 24-carat, 99.9% pure.
The biggest player in this segment is MMTC-PAMP, a joint venture between MMTC Ltd and Swiss bullion refiner PAMP SA. Other platforms such as Paytm, PhonePe, Google Pay, InCred Money, Tanishq, Jos Alukkas, and CaratLane also offer digital gold services.
Gold has been a top-performing asset class in 2025, rising nearly 60% in rupee terms. Global uncertainties, trade tensions, and record central bank purchases pushed gold prices to lifetime highs — crossing $4,300 per ounce globally and ₹1.32 lakh for 10 grams in India.
According to the National Payments Corporation of India (NPCI), digital gold transactions through UPI more than doubled from 50.93 million in January to 103.19 million in September 2025. The total transaction value also increased by 85%, from ₹762 crore to ₹1,410 crore during the same period.
Digital gold offers an easy and flexible way to invest in gold without the challenges of storage and security. Investors can buy in small fractions and sell or convert holdings into physical gold anytime. The convenience of 24x7 trading and redemption options adds to its appeal among younger and digital-savvy investors.
However, SEBI highlighted that digital gold remains unregulated, posing counterparty and operational risks. If a platform or distributor faces insolvency or defaults, investors may have no legal recourse.
While reputed entities like MMTC-PAMP back their holdings with physical gold verified by third-party audits, smaller and lesser-known platforms may not maintain the same standards. Additionally, digital gold prices often include 2–3% markups, payment gateway charges, and 3% GST, making them costlier than spot gold prices.
Investors have safer, regulated alternatives to gain exposure to gold. Gold ETFs, EGRs, and commodity derivatives are under SEBI’s supervision and backed by strict compliance mechanisms.
Data from the World Gold Council shows Indian gold ETFs received $850 million in net inflows in October 2025, ranking third globally after the US and China. Inflows so far in 2025 have reached around $3 billion, taking total AUM to $11.3 billion, indicating growing investor preference for regulated instruments.
Experts recommend that investors looking to invest in gold should choose SEBI-regulated options for better transparency and investor protection. Those still preferring digital formats should restrict purchases to reputed, large platforms with verifiable gold backing.
Physical gold remains an option but comes with storage and safety challenges. SEBI’s advisory serves as a reminder that while convenience matters, regulatory protection is essential to safeguard investor interests.
SEBI’s latest warning underscores the risks of unregulated digital gold products and the importance of investing through regulated channels like ETFs, EGRs, and commodity derivatives. As gold continues to attract investors amid global uncertainty, ensuring investments are made within the regulatory framework remains the most secure approach.
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