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.
SEBI Warns Investors On 'Digital Gold'
Risks: What It Is
