Summary: The shine of digital gold may look tempting, but SEBI’s latest warning reveals a darker truth. India’s market regulator has clarified that buying gold online via apps like Paytm or Google Pay is not under its protection — here’s what every investor must know.
Samay in 60 Seconds
- SEBI has warned against buying digital gold or e-gold on unregulated platforms.
- Such products are not recognized as securities or commodities under SEBI law.
- Investors in digital gold have no legal protection in case of fraud or default.
- Safer options include Gold ETFs, Sovereign Gold Bonds, and EGRs.
- Digital gold carries hidden charges and counterparty risks.
Digital Gold – Key Details at a Glance
| Aspect | Details |
|---|---|
| Regulator | Securities and Exchange Board of India (SEBI) |
| Date of Warning | November 08, 2025 |
| Issue | Unregulated sale of “digital gold” or “e-gold” online |
| Risk Highlighted | Counterparty & operational risk, zero investor protection |
| Safe Alternatives | Gold ETFs, Sovereign Gold Bonds, EGRs |
| Platforms Involved | Google Pay, PhonePe, Paytm, CaratLane, Tanishq |
| Applicable Taxes | 3% GST, capital gains, making & storage fees |
What Happened – Digital Gold Under SEBI Scanner
India’s glittering love affair with gold has gone digital — and now, under regulatory scrutiny.
The Securities and Exchange Board of India (SEBI) issued an official advisory warning the public that online “digital gold” or “e-gold” offerings are completely outside its regulatory framework.
The regulator observed that several mobile and web platforms are marketing digital gold as an easy alternative to buying physical gold — but without any formal oversight. SEBI said clearly:
“It has come to the notice of SEBI that some digital/online platforms are offering investors to invest in ‘Digital Gold/E-Gold Products’… such products are different from SEBI-regulated gold products as they are neither notified as securities nor regulated as commodity derivatives.”
In simple terms — if your digital gold provider defaults, you’re on your own.
Why It Matters – No Investor Protection
Unlike Gold ETFs or Electronic Gold Receipts (EGRs), digital gold isn’t backed by any SEBI-approved intermediary.
This means none of the investor protection mechanisms that apply to mutual funds or stock trades will save you if something goes wrong.
Your money is tied to private firms — refiners, app operators, and vault partners — which means one weak link can cause a total collapse. SEBI warned these products “may entail significant risks for investors and may expose investors to counterparty and operational risks.”
Even worse, most digital gold platforms restrict storage to five years, after which users must sell or take physical delivery — often with extra fees, taxes, and spreads that eat into profits.
Impact on You – Know the Hidden Costs
Digital gold promises convenience — buy a rupee’s worth anytime, anywhere. But behind the glossy app interface lie several costs:
- Buy-Sell Spread: A 3–6% difference between buying and selling price.
- Storage Limit: After 5 years, you must either sell or convert it to jewellery.
- GST: A flat 3% Goods and Services Tax applies upfront.
- No Legal Recourse: You can’t approach SEBI or any investor grievance cell if a platform shuts down.
Compare that to SEBI-regulated gold ETFs, where your investment is held transparently and traded on stock exchanges — safe, liquid, and legal.
Samay’s Voice – Truth Behind the Shine
Digital gold might sparkle on your smartphone, but it’s fool’s gold if you think it’s risk-free.
There’s no SEBI, no RBI, and no safety net. What seems like a modern financial innovation is, in reality, a private agreement that could vanish overnight.
The regulator’s message is crystal clear — “If it’s not regulated, it’s not protected.”
So before you click “Buy Gold” on your app, ask yourself one question:
Would you trust your life savings to a promise on the internet?
Street FAQs
Q: What exactly is digital gold or e-gold?
A: It’s a way to buy fractional amounts of gold online, stored in a private vault by a partner company.
Q: Is it backed by real gold?
A: Yes, usually by refiners like MMTC-PAMP or SafeGold, but without SEBI regulation or insurance cover.
Q: Can SEBI protect me if my digital gold platform shuts down?
A: No. Digital gold isn’t under SEBI’s jurisdiction — you have no legal protection.
Q: What are safer ways to invest in gold?
A: Through Gold ETFs, Sovereign Gold Bonds, or EGRs — all SEBI-regulated and tradable on exchanges.
Q: Are there taxes on digital gold?
A: Yes. 3% GST applies on purchase, and capital gains tax applies on sale.
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Sources
- SEBI Press Release PR No. 70/2025
- SEBI Official Website – Investor Caution Notice
- CaratLane Blog on Digital Gold
- NDTV Profit & LawTrend Reports
