SEBI

SEBI cautions public regarding dealing in ‘Digital Gold’ or ‘E-Gold’

SEBI Has issued a Press Release cautioning on dealing in Digital Gold.

Digital Gold or E-Gold refers to electronic investment products that allow investors to buy, sell, and hold gold digitally without physically possessing it. Such Digital Gold is claimed to backed by real, physical gold stored securely in vaults by trusted custodians. In India, there are several entities offering Digital Gold / E-Gold products i.e. (i) MMTC‑PAMP India Pvt. Ltd. a joint venture between MMTC Ltd. (a government undertaking) and Swiss firm PAMP SA, (ii) Digital Gold India Pvt. Ltd. (brand: SafeGold), (iii) Augmont Goldtech Pvt. Ltd., (iv) Jewellery brands: e.g., Tanishq’s “Gold+” digital gold plan via SafeGold etc.

SEBI has stated that it has come to its notice that some digital/online platforms are offering investors to invest in ‘Digital Gold/E-Gold Products’. Digital Gold is being marketed as an alternative for investment in physical gold.

SEBI has clarified that it had enabled investments in gold and gold related instruments through various SEBI regulated gold products. These are exchange traded commodity derivative contracts, Gold Exchange Traded Funds (ETFs) offered by Mutual Funds and Electronic Gold Receipts (EGRs) tradeable on stock exchanges. Investments in these SEBI regulated gold products can be made through SEBI registered intermediaries and are governed by the regulatory framework prescribed by SEBI.

SEBI has informed that said digital gold products are different from SEBI regulated gold products as they are neither notified as securities nor regulated as commodity derivatives. They operate entirely outside the purview of SEBI.

SEBI has stated that such digital gold products may entail significant risks for investors and may expose investors to counterparty and operational risks and none of the investor protection mechanisms under securities market purview shall be available for investments in such Digital Gold/ E-Gold products.

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