There is no lack of new financial products in the Indian markets to which investors get attracted. A new product doing the rounds is "Digital Gold" or "e-gold", promoted by several online platforms. Here, the platforms enable an investor to invest as little as Rs 10-Rs 100, and a corresponding quantity of Gold is allegedly credited to the account. The same can be apparently sold back or converted to actual Gold later. The ease of storing, redeeming and less cost involved are features that attract especially small investors.
But SEBI has clarified that digital gold offerings are not classified as securities and are not regulated by the market regulator as commodity derivatives. Since these products lie outside SEBI's regulatory framework, they carry no guaranteed investor protection and offer limited legal recourse if issues arise.
Our view: With Gold prices shooting through the roof, the temptations are high to spend on it. To make the package attractive some platforms even credit "Free Gold Coins" depending on the amounts spent, providing a possibly impossible to resist choice for the customers. But the warnings by SEBI should be a sufficient deterrent given that it is always trying to bring in financial literacy among the citizens. There is no such thing as a free lunch or a Free Gold Coin. Sebi's general warning is therefore a salutary one for the investors.
Link - SEBI Warns Investors On 'Digital Gold' Risks: What It Is
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