Introduction:
Is Your Digital Gold Safe? That is the question many investors across India are asking today. With the Securities and Exchange Board of India (SEBI) issuing a fresh advisory on 8 November 2025 about digital-gold (also referred to as “e-gold” or “digital gold”) products, it has stirred up significant concern and conversation. (Securities and Exchange Board of India)
In this blog, we take a deep dive into what SEBI’s advisory means, the risks involved with digital-gold investments, and how you can make more informed choices going forward.
What is “Digital Gold”?
“Digital gold” refers to online platforms (apps and fintech interfaces) that allow you to purchase gold in small fractions (often ₹10, ₹100 or similar) without physically holding bullion. These platforms promise convenience, from purchase to storage and redemption. (India Today)
For example: you open an app, buy 0.1 gram of 24-karat gold, the vendor claims that this gold is stored in a vault, and you can later sell it back or convert to physical gold.
But as the new advisory shows, the underlying structure may be less safe than it seems.
What Did SEBI Say?
On 8 November 2025, SEBI released a press notification titled “Caution to public regarding dealing in ‘Digital Gold’”. (Securities and Exchange Board of India)
Key points from SEBI’s advisory:
- Digital-gold products are not recognised as securities nor as commodity derivatives, and therefore fall outside SEBI’s regulatory purview. (India Today)
- These products “may entail significant risks” for investors, including counterparty and operational risks. (Upstox – Online Stock and Share Trading)
- None of the investor protection mechanisms applicable under securities laws will apply to digital-gold holdings. (Upstox – Online Stock and Share Trading)
- SEBI did not ban digital gold, but strongly urged caution and urged investors to note that the regulatory safety nets are absent. (India Today)
Thus, the overarching message: Is Your Digital Gold Safe? Not automatically—or at least, not with the same comfort as regulated investments.
Why the Concern? The Risks Behind Digital Gold
1. Lack of Regulatory Oversight
Because digital-gold platforms aren’t regulated under SEBI, there is no guarantee that they follow the same standards of audit, custody, transparency, or investor grievance mechanisms. That means: if something goes wrong, your recourse may be much weaker.
2. Counterparty Risk
If the platform (or its vaulting partner) suffers financial distress, defaults, or shuts down, investors may struggle to redeem or convert their holdings. In an unregulated environment, there is no formal guarantee.
3. Operational Risk & Custody Issues
How do you know the gold actually exists, is stored securely, insured, audited, and corresponds to your holdings? Without third-party verification, the “digital gold” you hold might not have a one-to-one physical counterpart.
4. Hidden Costs and Liquidity Issues
Digital gold often comes with embedded mark-ups, storage fees, GST (~3 %) and sometimes restrictive redemption terms. By contrast, regulated gold products may have lower friction.
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5. Psychological/Convenience Trap
Because these apps make gold-buying appear trivial (₹10 here, ₹50 there), investors might be lulled into thinking it is “safe enough” – but convenience doesn’t replace regulatory safety. This is exactly the kind of trap SEBI is warning of.
6. My “Is Your Digital Gold Safe?” verdict
When you ask “Is Your Digital Gold Safe?”, the honest answer is: it depends. On the platform, the audit/custody clarity, the redemption policy, and your risk tolerance. If you treat it like the same as physically-backed, regulated gold – you may be mis-judging the risk.
What Should You Do? Practical Steps
Here are actionable guidelines if you have digital gold holdings, or are considering them.
Regulatory and Ethical Challenges
Step 1: Review your current holdings
- Identify which platform you purchased from.
- Check if the platform publishes independent third-party audit reports or vault certifications. (Business Standard)
- Check the redemption process: can you convert into physical gold? Are there delays, minimums, fees?
- Consider your portion of portfolio; is a high proportion of your “gold exposure” unregulated?
Step 2: Consider shifting to regulated alternatives
SEBI recommends (via its advisory and via commentary) moving to investments which are under its oversight. Some of the suggested alternatives:
- Gold ETFs (exchange-traded funds) offered by mutual funds. (Ventura Securities)
- Electronic Gold Receipts (EGRs) traded on stock exchanges. (India Today)
- Exchange-traded commodity derivative contracts in gold. (Ventura Securities)
These are subject to regulatory safeguards and provide better transparency.
Step 3: If you continue with digital gold, limit your exposure
Treat it as convenience money rather than core investment. For example: small amounts for short-term goals, but long-term holdings should be in regulated instruments.
Step 4: Keep documentation and verify periodically
Save purchase receipts, platform terms, redemption records. Monitor any regulatory changes, and maintain flexibility to exit if red flags appear.
Step 5: Educate yourself
Understanding what you are buying is key. Don’t simply rely on convenience. The “Is Your Digital Gold Safe?” question must be answered in light of your due diligence.
Regulated vs Unregulated: A Comparison
Feature | Digital Gold (Unregulated) | Gold ETF / EGR (Regulated) |
Regulatory oversight | None (under SEBI) (India Today) | Under SEBI, audited, investor protection |
Custody and audit clarity | Varies widely; may lack independent verification | Standardised audits, custodians, exchange-listed |
Liquidity / redemption | Depends on platform; may face delays or fees | Traded on exchange; clearer redemption mechanics |
Cost structure | May include mark-ups, GST, storage fees (Business Standard) | Expense ratios known, transparent |
Investor obligation | You carry higher risk if the platform fails | Regulatory framework offers recourse mechanisms |
Suitable for | Small, short-term speculative convenience | Core long-term gold exposure |
Why Gold is Still Hot – but Safety Matters
Global uncertainties, inflation worries and safe-haven demand have driven interest in gold. According to one report, digital gold transactions in India via UPI rose significantly in 2025.
However, as gold becomes popular, so does the risk of riding in unregulated channels. The key message: the asset class (gold) might be durable, but the vehicle matters tremendously.
Conclusion
So, Is Your Digital Gold Safe? In short: maybe, but with caveats. The convenience and accessibility of digital gold are attractive—but the absence of regulatory safeguards means you’re assuming extra risk. If you treat digital gold exactly like a regulated investment, you may be under-estimating that risk.
If you:
- are holding small amounts for convenience,
- buy from a well-known platform with transparency, audit/custody statements,
- understand that redemption may depend entirely on the issuing platform,
then you might be comfortable continuing with digital gold.
However, if you:
- are committing large sums through a lesser-known platform,
- rely on redemption or long-term storage through that entity,
- haven’t verified audit/custody details,
then you should seriously ask whether Is Your Digital Gold Safe? and consider moving your exposure into regulated alternatives.
At the end of the day: gold as an asset class remains strong — but the investment vehicle (digital gold app vs ETF) can make a huge difference to your safety, transparency, and control.
frequently asked questions
SEBI observed that many digital-gold products offered via fintech apps are neither recognised as securities nor as commodity derivatives, meaning they escape its regulatory framework.
No – SEBI has not banned digital gold. It has issued a caution to investors that these products lie outside its purview, and that some may entail significant risks.
Not necessarily. Experts say you need not panic, but you should review the platform’s credibility, how the gold is stored, and look for red flags. And consider transferring significant holdings into regulated alternatives.
As mentioned: Gold ETFs, Electronic Gold Receipts (EGRs), exchange-traded gold derivative contracts — all under SEBI’s framework.
While this goes beyond the digital-gold question, general guidance suggests gold allocation could be about 10-15% of a diversified portfolio; but ideally via regulated/transparent vehicles.