Digital Gold: Big news for everyone. The Securities and Exchange Board of India (SEBI) has cautioned investors against digital gold and gold-related online products. SEBI stated that several online platforms are encouraging investors to invest in digital gold or e-gold products, claiming they are an alternative to investing in physical gold. However, these products are not under SEBI’s regulatory purview and are not subject to any investor protection mechanisms.
The regulator clarified that such digital gold products are neither recognized as securities nor regulated as commodity derivatives. Therefore, investors cannot claim any SEBI protection when investing in these products. SEBI advised investors to prioritize legitimate options offered by SEBI-registered entities for investing in gold or gold-related instruments. For example, gold ETFs or mutual fund schemes should be preferred. All of these fall under investor protection standards and regulatory frameworks.
Reacting to the growing adoption of digital gold, Tata Group’s CaratLane and other platforms like PhonePe, Google Pay, and Paytm are now offering mobile-based digital gold options, allowing people to purchase gold using their smartphones. These companies offer this service in partnership with organizations like SafeGold, MMTC-PAMP, and Tanishq.
What is digital gold?
Digital gold is a way to purchase gold online that is backed by physical gold stored in secure and insured vaults. However, according to a recent SEBI notification, these items are not regulated under SEBI’s investor protection norms. Investors should also be aware that goods and services tax (GST), capital gains tax, and short-term benefits tax are also applicable on the purchase of digital gold products.
