We don’t Regulate Digital Gold, Stay Safe!! SEBI issues Warning
Recently, many fintech companies have been promoting their mobile apps and attracting customers by offering Digital Gold. You may have also seen advertisements on YouTube and television about Digital Gold. These apps encourage users to make payments through their platforms and receive Digital Gold as cashback. However, this practice is now facing backlash. SEBI has issued a strict warning.
Market regulator SEBI has issued a warning to investors about investing in digital gold or e-gold products. SEBI said these products are not regulated by the authority and can be very risky for investors. This warning comes after SEBI noticed that several online platforms are promoting digital gold as an easy alternative to buying physical gold.
SEBI stated that digital gold products are completely different from gold investment options that SEBI regulates. These products are not classified as securities and are not regulated as commodity derivatives. This means they function outside SEBI’s supervision.
According to SEBI, such digital gold products carry high risks, including the possibility that the company offering them may fail to deliver the gold or may stop operations. Investors may also face operational risks, such as platform failure or fraud. SEBI also clarified that the investor protection rules that apply to regulated products do not apply to digital gold schemes. So if something goes wrong, investors may not have any legal protection.
The regulator advised investors to invest in gold only through SEBI-regulated options, such as:
- Gold Exchange-Traded Funds (ETFs) offered by mutual funds
- Exchange-traded commodity derivatives
- Electronic Gold Receipts (EGRs) available on stock exchanges
SEBI said that these regulated gold products can be purchased through registered intermediaries, and all such investments follow strict rules to ensure investor safety.
Investors are advised to stay cautious and not get influenced by flashy ads or cashback offers from companies promoting Digital Gold. Since these products are not regulated by SEBI, they carry high risks. Protect your money and invest only through trusted, SEBI-regulated options. Stay alert and stay safe.
