Sebi warns investors against unregulated platforms offering digital gold products

Markets regulator Securities and Exchange Board of India (Sebi) on Saturday warned investors against digital or online platforms offering gold products as they pose significant risks to investors and could expose them to counterparty or operational risks.“It has come to Sebi’s attention that some digital/online platforms are offering investors to invest in ‘digital gold/e-gold products’. Digital gold is being marketed as an alternative to investments in physical gold. In this context, it is informed that such digital gold products are different from Sebi regulated gold products as they are neither registered as securities nor regulated as commodity derivatives. They operate completely outside the ambit of Sebi,” the regulator said in a press release.

“Such digital gold products may pose significant risks to investors and may expose investors to counterparty and operational risks. Investors/participants are advised that none of the investor protection mechanisms under the supervision of the securities market will be available for investments in such digital gold/EGold products,” the press release warned.The capital markets regulator has enabled investment in gold and gold-related instruments through various Sebi-regulated gold products, including exchange-traded commodity derivative contracts, gold exchange traded funds (ETFs) offered by mutual funds and electronic gold receipts (EGRs) tradable on stock exchanges.

Investments in these Sebi-regulated gold products can be made through registered intermediaries and fall under the regulatory framework prescribed by the securities watchdog.

Sebi regularly warns investors against illegal or unregulated activities. Recently, it warned investors about fabricated messages sent by scammers disguised as Sebi officials. The fraudulent communication seeks payments on behalf of Sebi. “Sebi has noticed several cases of impersonation of Sebi officials, various offices of Sebi and email IDs of Sebi officials by fraudsters. Fraudsters claim to be officials of Sebi and send message to entities using Sebi letterhead, logo and seal,” a Sebi press release said. Sebi also noted that in certain cases, fraudsters are sending notices through social media platforms and requesting payments for compliance services and payment of fines. amounts/fines to prevent action from Sebi.

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To carry out the scam, fraudsters misuse Sebi letterhead to falsely claim that their accounts are certified supplier or merchant accounts operating under Sebi’s supervision.

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