Today, be it UPI apps or big jewelery brands, digital gold has made its place in the fintech ecosystem of the country. Why not? A UPI user can now buy e-gold, even 24 karat gold, for just ₹10 in just one click. But this purchase of e-gold may prove costly; We are not saying this, but market regulator SEBI has issued an important warning (SEBI warning on e-gold).
E-gold product is not under the purview of SEBI
In recent times, purchases of digital gold have increased rapidly. Amidst this increasing selling, SEBI has issued an important warning for investors. The market regulator has warned that e-gold is expanding its market reach, but it could put investors at risk. In a press release, the regulator said some online platforms offer e-gold products to investors, which are outside its scope. These digital gold products are neither notified as securities nor regulated as commodity derivatives.
If money gets stuck, there is no help
According to a report in Business Today, the market regulator stressed that investors buying such products will not be covered by any investor protection mechanism available in SEBI-regulated markets. This means that if any kind of fraud happens to them during purchase, the company selling e-gold is declared bankrupt, or investors’ money gets stuck, then investors will not be able to seek any recourse through the securities market system in such disputes.
Why is e-gold attracting investors?
E-gold, or digital gold, is particularly attractive among young and first-time investors, who can easily buy and sell it at low prices. For convenience, investors buy a certain amount of digital gold, and the platform reserves the same amount of physical gold. Buyers can later sell it online or receive it in the form of coins or bars.
Major entities operating in this sector include MMTC-PAMP, SafeGold and Augmont Gold. They offer their products through popular financial technology platforms like Google Pay, Paytm, PhonePe, Amazon Pay, Groww, Airtel Payments Bank and Jio Gold as well as jewelery brands like Tanishq Digigold, Jose Alukkas, Caratlane and PC Jewellers.
SEBI said, “Buy from here…”
Experts agree that digital gold is convenient, but it also comes with risks. In recent years, many such savings schemes run by jewelers have faced scrutiny over the lack of regulatory safeguards. SEBI recommends using regulated instruments like ETFs or EGR to invest in gold, which come with investor protection framework.