1. What is Digital Gold? Digital gold is a fintech innovation that allows users to buy, sell, and hold fractional quantities of gold online without the hassles of physical storage or safety. Purchases can be made via apps like PhonePe, Paytm, Amazon Pay, and Google Pay in India, with transactions sometimes as low as ₹1. The gold is stored in insured vaults by providers such as MMTC-PAMP, Augmont, and SafeGold, and investors can redeem their units for physical gold, coins, or cash at any time. 2. Digital Gold vs Physical Gold: Features, Pros, and Cons. 3. India’s Digital Gold Boom: Market Data UPI-powered digital gold purchases spiked 377% in just 16 months, soaring to 99.77 million transactions (August 2025), up from 20.92 million in April 2024. The value of such buys more than doubled: from ₹550 crore (April 2024) to ₹1,184 crore (August 2025). 85% of digital gold transactions are routed through UPI platforms, with PhonePe, Paytm, and Google Pay dominating the ecosystem. Gold prices in India surged 44% year-on-year to ₹11,021 per gram in August 2025, further fueling digital adoption. Despite this, SEBI’s warnings have increased, and market observers expect a cooling period in digital gold demand as risk awareness spreads. 4. Why Is SEBI Warning Against Digital Gold? In November 2025, SEBI issued an emphatic warning that digital gold products sold online: Are unregulated & outside SEBI jurisdiction Are not notified as securities nor regulated commodity derivatives Do not have any investor protection mechanisms under SEBI’s regulatory framework The reason: online platforms offering digital gold operate entirely outside the purview of SEBI, exposing investors to counterparty and operational risks. SEBI has explicitly told exchanges, registered intermediaries, and RIAs not to deal in digital gold products. 5. Key Risks for Investors a. Counterparty Risk If the company holding your digital gold goes bankrupt or defaults, you could lose your entire investment. Unlike SEBI-regulated platforms, there’s little guarantee the physical gold actually exists or will be returned. b. Cyber & Operational Risks Platforms might face hacking, system breakdowns, or fraud. Since there's no regulatory oversight, resolving disputes is difficult, and compensation is not guaranteed. c. Illusion of Regulation Many investors mistakenly assume digital gold is as safe as gold ETFs, but digital gold is not covered by SEBI’s rules or benefits. d. Lack of Clarity about Custody Some platforms don’t clearly publish who owns the gold or where it is stored, leaving investors unsure if their gold is really safe. e. Taxation & Liquidity Hurdles Digital gold is taxed as physical gold but may offer less liquidity during volatile periods and could face redemption/lock-in restrictions. 6. Safer SEBI-Regulated Gold Investment Alternatives a. Gold ETFs Units of gold traded on stock exchanges. Fully regulated, transparent, highly liquid, and can be bought/sold like shares via demat accounts. b. Gold Mutual Funds Funds that invest in gold ETFs. Investors don’t need a demat account, and funds can be easily entered/exited digitally. c. Electronic Gold Receipts (EGRs) Physical gold represented by digital receipts, traded on official exchanges under SEBI regulation. d. Sovereign Gold Bonds (SGBs) RBI & government-backed bonds with 2.5% interest, exempt from capital gains tax if held to maturity. 7. Real-World Examples: What Can Go Wrong? 2019-20: In Singapore, fintech startup Digix went bust due to platform failures, leaving investors unable to redeem their digital gold despite high gold prices. India, 2022: Complaints surfaced about unregulated platforms either not delivering physical gold on request, or sudden “maintenance” locking out customers. Ongoing: Investors forced to accept sub-optimal buyback prices, high platform charges, or failed transfers due to unclear terms. 8. What Do Experts Say? SEBI “Digital gold products are not regulated… none of the investor protection mechanisms under securities market purview shall be available for investments in such Digital Gold/E-Gold products,” — SEBI Advisory, Nov 2025. Market Analysts “Investors flock to digital gold for convenience, but lack of transparency and regulation can lead to losses — due diligence is essential,” says Ashok Agarwal, financial planner, Mumbai. Industry Leaders “Digital gold innovation is welcome, but clear regulatory guardrails are critical. Until then, investors should stick with regulated ETFs, EGRs, or SGBs for capital safety,” notes a senior mutual fund executive. 9. Tips for Safer Gold Investments Invest only via SEBI-registered intermediaries/platforms. Verify the regulatory credentials of products before investing. Avoid schemes promoted by social media influencers or unverifiable apps. Read product terms closely; check for penalties, redemption rights, and customer service access. Prefer products with transparent pricing and regulator oversight. 10. Frequen