The Securities and Exchange Board of India (SEBI) has cautioned investors against purchasing digital gold from online platforms, noting that the product currently operates outside the regulatory framework that governs market-linked securities and commodities. The advisory comes amid increasing popularity of digital gold offered through ecommerce platforms, fintech apps, and jewellery brands, raising concerns about investor protection and accountability.

Digital gold growing, but without regulation

Over the past few years, digital gold has emerged as an accessible option for consumers who prefer to purchase gold in small quantities. Platforms such as Tanishq, CaratLane, MMTC-PAMP, and digital payment apps like Google Pay and PhonePe offer customers the option to buy gold in fractional amounts and store it in insured vaults.

However, SEBI noted that while physical gold and gold-related market instruments such as sovereign gold bonds and gold ETFs are regulated, digital gold does not fall under any formal regulatory jurisdiction. This means there is no statutory protection for buyers in case of disputes, fraud, or default by sellers or vaulting agencies.

SEBI flags risks for consumers

The market regulator highlighted a number of potential risks:

  • Unclear ownership rights in situations where digital gold is held in pooled vaults.
  • Price transparency issues, as platforms may follow different pricing benchmarks.
  • Lack of grievance redressal, since there is no regulatory body overseeing transactions.
  • Possibility of platform-level insolvency risks, leaving customers exposed.

SEBI said that investors often assume digital gold is regulated because of its association with well-known brands, but emphasized that “trust in brand names cannot substitute regulatory protection.”

Industry response and current practice

Companies dealing in digital gold maintain that they comply with internal auditing standards and work with certified refinery and vaulting partners. MMTC-PAMP, for instance, states that its stored gold is insured and audited by independent agencies.

Jewellery platforms such as Tanishq and CaratLane position digital gold as a savings tool that can later be converted into jewellery purchases, while fintech apps highlight convenience and instant liquidity. However, none of these practices substitute regulatory oversight, SEBI clarified.

What investors can do

SEBI suggested that consumers seeking gold-backed investment options consider regulated alternatives, including:

  • Sovereign Gold Bonds (SGBs) issued by the Reserve Bank of India.
  • Gold Exchange Traded Funds (ETFs) traded on stock exchanges.
  • Gold Mutual Fund schemes offered by registered asset management companies.

These instruments carry clear regulatory supervision and defined dispute resolution mechanisms.

Policy outlook

The government has yet to announce whether digital gold will come under SEBI, RBI, or another supervisory body. Discussions on bringing digital asset-backed products within a broader regulatory framework are ongoing, but no timeline has been confirmed.

As of now, digital gold remains a consumer-centric retail product without formal investor protections.