SEBI Warns Against Digital Gold: Should You Hold or Exit? Sandip Raichura at PL Capital Explains

Mumbai | November 13

The Securities and Exchange Board of India (SEBI) has issued a strong caution to investors buying digital gold through fintech apps and online platforms, noting that such products fall completely outside the regulator’s oversight. Digital gold, SEBI clarified, is neither a recognised security nor a regulated commodity derivative, leaving investors exposed to counterparty and operational risks without any investor protection mechanisms available in the securities market.

The warning comes at a time when digital gold has grown popular, particularly among younger, digitally oriented investors attracted by low ticket sizes and convenience. However, SEBI’s note highlights that convenience cannot substitute regulation. Many online platforms selling digital gold are unregistered, offer differing pricing and storage terms, and provide limited clarity on purity, insurance, or how physical gold is held on behalf of investors. This lack of uniform standards is at the heart of the regulator’s concern.

For Existing Investors: Should You Hold or Exit?

Investors currently holding digital gold have been advised not to panic, but to carefully re-evaluate the credibility and practices of the platform they invested through. The absence of regulation means storage arrangements, insurance quality, and redemption processes can vary substantially across providers. In this context, Sandip Raichura, CEO – Retail & Broking, PL Capital, emphasises that investors must recognise the structural weaknesses of digital gold. He explains that digital gold is “an inefficient form of investment compared to gold mutual funds and, most importantly, gold ETFs”, noting that each platform has its own pricing structure, conditions, and rules, which makes the experience inconsistent and unnecessarily complicated. Raichura adds that from both an investment and safety standpoint, digital gold is not advisable, and existing investors should consider shifting to regulated products where transparency and investor protection are guaranteed.

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For New Investors: Where Should You Put Your Money?

SEBI has reiterated that investors looking to build gold exposure should do so only through regulated avenues that offer transparency, proper price discovery, and formal grievance mechanisms. The regulator has highlighted the need to avoid unregistered fintech platforms and instead focus on gold instruments available through recognised intermediaries.

SEBI’s advisory restated four key points:

• Invest only through regulated instruments such as Gold ETFs, commodity derivatives and EGRs
• Many fintech apps sell gold without any regulatory oversight
• Digital gold is not registered with SEBI
• Gold investments must be made only through registered and supervised entities

Raichura reinforces this direction, adding that investors with a demat account should choose gold ETFs, which directly track market prices and provide liquidity within a regulated framework. For those without a demat account, he suggests gold mutual funds as a simple and transparent alternative that allows small-ticket investments and fully digital transactions. He stresses that regulated products “offer pricing aligned with gold movements while ensuring total convenience”, making them far superior to digital gold for long-term wealth-building.

SEBI’s advisory underlines a clear message: while digital gold may be easy to purchase, its lack of regulation, standardisation, and investor safeguards makes it unsuitable for serious investing. With concerns around counterparty risk, storage practices and platform reliability, Raichura urges investors to prioritise regulated instruments-ensuring safety, transparency and long-term confidence in their gold investments