The Securities and Exchange Board of India (SEBI) has cautioned investors against purchasing digital gold through fintech platforms, labeling such products as unregulated and prone to significant risks. The regulator highlighted potential vulnerabilities including lack of oversight, transparency issues, and exposure to counterparty defaults.
Market experts echoed SEBI’s concerns, advising investors to redirect capital toward safer, SEBI-regulated alternatives such as Gold Exchange-Traded Funds (ETFs) and sovereign gold bonds. These instruments offer standardized pricing, liquidity on recognized exchanges, and regulatory safeguards, mitigating the pitfalls associated with app-based digital gold schemes.
The advisory comes amid growing popularity of fintech-driven gold investments, prompting calls for enhanced due diligence to protect retail portfolios. Investors are urged to verify regulatory compliance before committing funds.
SEBI has fired a fresh salvo at the glittering world of fintech gold, warning investors that the “Digital Gold” or “E-Gold” products peddled by apps are nothing like the real, regulated deal.
In a pointed notice issued on November 10, the regulator flagged that these platforms are luring users with the promise of hassle-free gold ownership—starting at just ₹500—while operating in a complete regulatory void. Unlike Gold ETFs, exchange-traded commodity contracts, or Electronic Gold Receipts (EGRs), which fall squarely under SEBI’s watchful eye, these app-based offerings are neither classified as securities nor governed as commodity derivatives.
The risks are stark. There’s no mandatory audit to confirm the gold actually sits in a vault, no segregated client assets, and no legal safety net if the platform collapses. Counterparty default, redemption delays, or outright non-delivery of physical gold are all on the table—yet SEBI has no jurisdiction to step in.
Investing in gold has never been simpler or safer than with Gold Exchange-Traded Funds (ETFs), which let you own a slice of pure gold without ever touching a coin or bar. Traded just like stocks on the NSE and BSE, each unit typically represents one gram of 99.5% pure gold securely stored in vaults by the fund house.
What truly sets Gold ETFs apart is the iron-clad SEBI regulation that governs every aspect—from mandatory disclosures and audited storage to trustee oversight—eliminating the counterparty risks that plague unregulated fintech “digital gold” schemes.
If a platform collapses, your gold remains untouched in RBI-approved banks.Liquidity is another standout advantage: you can buy or sell instantly during market hours (9:15 AM to 3:30 PM IST) at live prices, with settlement in T+1, compared to the days or weeks often needed to offload physical gold.
Forget locker fees, theft worries, or the 10–20% making charges that erode returns on jewellery and bars—the only cost is a modest expense ratio, averaging 0.5–1% annually (for instance, Nippon India Gold ETF charges 0.79%). Pricing transparency is absolute, with the fund tracking domestic gold rates from the IBJA with tracking errors under 0.5%, and live NAVs visible on the exchanges—no hidden spreads or surprises.
Tax treatment has become even more investor-friendly after Budget 2024: hold for over three years and pay just 12.5% LTCG, while short-term gains fall under your slab rate. This is a cleaner deal than physical gold’s earlier 20% with indexation.
Gold ETFs also shine as a diversification tool, moving inversely to equities and shielding portfolios from inflation or rupee weakness. You can start SIPs or STPs from as little as ₹100 through a demat account, and since everything is paperless, there’s no GST on purchase—only the tiny expense ratio.
Even better, fractional ownership means you can begin with ₹500–1,000 instead of ₹60,000 for a 10-gram coin. Among the top performers as of November 10, 2025, Nippon India Gold ETF leads with ₹14,200 crore AUM and a 0.79% TER, followed by HDFC Gold ETF (₹6,800 crore AUM, 0.59% TER) and SBI Gold ETF, which offers the lowest TER at 0.52%.
Getting started is straightforward: open a demat and trading account, search for “GOLD ETF,” and buy like any stock—use limit orders during volatile hours to minimise impact cost. In an era of fintech hype, Gold ETFs remain the regulated, liquid, and cost-efficient gateway to the yellow metal.
As one market watcher put it, “You’re trusting a screenshot, not a system.” In contrast, mutual funds and brokers must ring-fence your money and submit to routine scrutiny; digital gold platforms answer only to themselves.SEBI’s message is crystal clear: this isn’t a ban on gold investing—it’s a neon sign screaming “Buyer Beware.”
The regulator urges investors to pivot to battle-tested alternatives like Gold ETFs and EGRs, which trade seamlessly on the NSE and BSE with full transparency, liquidity, and investor safeguards. In short, if your gold doesn’t come with a SEBI stamp, it might as well be fool’s gold.
Naorem Mohen is the Editor of Signpost News. Explore his views and opinion on X: @laimacha.
Naorem Mohen
View More PostsNaorem Mohen is the Editor of Signpost News. Explore his views and opinion on X: @laimacha.
