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SEBI has issued a big alert for those investing in digital gold. The regulator said that many online platforms are selling such products without rules. The risk in these unregulated investments is high and there is no guarantee of investor safety.
Mumbai. Indian market regulator SEBI has advised investors to be cautious while investing in digital or e-gold. SEBI has said that these products do not come under its regulatory limits, hence investing in them can be risky. Many online platforms are promoting digital gold as an easy alternative to physical gold, but the truth is that it is a completely unregulated market, where there is neither guarantee of investor protection nor any legal framework.
Clear message from SEBI – This gold product is not within our scope
SEBI clarified in its statement that digital gold or e-gold is neither considered a security nor does it fall in the category of commodity derivatives. That means these products are completely out of the control of SEBI. The regulator said that with such investments, investors may face counterparty risk and operational risk. Also, unlike regulated products, there is no investor protection mechanism in place. Therefore, investors should take careful decisions and stay away from any platform that does not maintain adequate transparency.
SEBI’s suggestions – where to make safe investments
SEBI has advised investors that if they want to invest in gold, they should choose only SEBI-regulated options. These include gold ETFs, electronic gold receipts (EGRs) and exchange-traded commodity derivatives. All these products are traded on recognized stock exchanges and come fully under SEBI regulations. Transactions for these investments should be done only through registered intermediaries.
Lesson for investors – invest wisely, not greedily.
In the name of digital gold, many online companies are attracting people with the promise of fast profits, but many of these platforms are not under any legal control. In such a situation, investors may become victims of fraud or default. This warning of SEBI is especially in the interest of small investors, so that they can avoid investments without security. Market experts also say that ‘if the investment is not safe, then profits are just an illusion.’ Therefore, before investing in gold, it is important to check whether it is regulated or not – otherwise shining gold can also cause losses.
