The Securities and Exchange Board of India (SEBI) has recently issued a warning to investors about the growing trend of buying digital gold. The regulator cautioned that many platforms offering digital gold are not registered or regulated, which means your investment might not be as safe as you think.
Let’s break down what this means, why SEBI’s warning matters, and how you can invest smartly in gold without risk.
What Is Digital Gold?
Digital gold allows you to buy and store gold online without physically owning it. Many fintech apps and payment platforms in India — like Paytm, PhonePe, and Google Pay — offer users the option to purchase gold in small amounts (as low as ₹1).
Your gold is stored in vaults by private companies, and you can later redeem it for cash or physical gold. On paper, it looks convenient — no storage issues, no making charges, and full flexibility. But the catch lies in who regulates it.
Why SEBI Issued a Warning
According to SEBI, digital gold is not regulated under any Indian financial law. That means:
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No official body guarantees your gold ownership.
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In case the platform shuts down, you could lose your investment.
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Prices and purity depend solely on private vendors, not government-approved exchanges.
SEBI also clarified that digital gold is different from Gold ETFs and Sovereign Gold Bonds, both of which are regulated and backed by official institutions.
Simply put, if you’re buying digital gold from an app, you’re dealing with a private company — not a government-approved financial product.
How Digital Gold Differs from Gold ETFs and SGBs
| Type | Regulation | Backed By | Liquidity | Risk Level |
|---|---|---|---|---|
| Digital Gold | ❌ Not regulated | Private companies | Moderate | High |
| Gold ETF | ✅ SEBI regulated | Physical gold held by fund | High (via stock market) | Low |
| Sovereign Gold Bond (SGB) | ✅ RBI regulated | Government of India | Low (fixed tenure) | Very Low |
This table shows why SEBI wants investors to be careful. Gold ETFs and SGBs offer transparency, security, and regulatory protection — while digital gold doesn’t.
What Are the Main Risks for Investors?
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No Legal Protection:
If a platform defaults or goes bankrupt, recovering your gold can be difficult. -
Ownership Uncertainty:
Many platforms store gold under a pooled account, not your name. -
Price Manipulation:
Without regulation, companies can charge hidden fees or offer different buy/sell rates. -
Tax and Purity Issues:
Since it’s not an RBI/SEBI product, there’s confusion around tax benefits and purity validation.
What You Should Do Instead
If you’re planning to invest in gold safely:
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Prefer Gold ETFs or Sovereign Gold Bonds.
Both are regulated and easily tradable. -
Buy only from trusted jewellers or government mints.
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Check for BIS hallmark and purity certifications.
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Avoid unverified apps promising “instant digital gold returns.”
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Keep your investment strategy diversified — don’t rely only on gold.
Why This News Matters Now
Digital gold has become a massive trend in India’s fintech world, especially among young investors. But SEBI’s 2025 warning highlights the risks behind this convenience.
As of now, no financial authority directly oversees digital gold transactions, making investor awareness crucial. Several experts believe regulation could arrive soon — but until then, caution is key.
Expert Take
Financial planners suggest treating digital gold like a short-term savings tool, not a long-term investment. If you want gold exposure for 5–10 years, go for ETFs or SGBs — they not only give you security but also potential annual interest or capital appreciation.
Final Thoughts
SEBI’s latest warning is a wake-up call for Indian investors who rely on digital gold without understanding the risks. Convenience should never come at the cost of safety.
Before investing, always check whether your money is going into a regulated financial instrument. As SEBI rightly said — “If it’s not under our watch, you’re on your own.”
