MediaNama’s Take
Digital gold is booming, but India’s market regulator SEBI has all but washed its hands off the product. Data from the National Payments Corporation of India (NPCI) shows that the volume of digital gold purchases through UPI has more than doubled in the last 10 months, hitting 103.2 million transactions in September 2025, compared to 50.93 million in January. Meanwhile, the value of transactions surged 85% to Rs 1,410.2 crore during the same time period.
While it is evident that investor appetite for digital gold is on the rise in the country, SEBI has warned investors that such products offered by companies such as CaratLane, PhonePe, Paytm and Google Pay are not regulated under its framework. Nor do they fall under the purview of the Reserve Bank of India (RBI). In plain words, this product sits in a regulatory grey area — there are no disclosure norms, no grievance redressal mechanisms and no capital safeguards to protect the investor.
Add to that a lack of transparency in pricing: currently, the government levies a 3% Goods and Services Tax (GST) on digital gold purchases, but beneath it lie several hidden markups, covering the platform’s distribution costs, UPI and payment gateway fees, vaulting, insurance and other operational costs. Notably, this markup fee fluctuates from platform to platform. But what if the distributor or the fintech platform offering such a product goes bust? Is there any recourse for investors?
What’s the news
We missed this earlier: The Securities and Exchange Board of India (SEBI) on November 8, 2025, issued a public advisory, warning investors dealing in unregulated ‘digital gold’ products.
The markets regulator said that it has come to its attention that some online platforms have been luring investors to buy this product, marketing it as an “alternative to physical gold”.
However, such digital gold products have neither been notified as securities nor are they regulated as commodity derivatives, SEBI warned. It further stated that digital gold does not fall under its purview and may expose investors to “counterparty and operational risks”.
“Investors/participants are made aware that none of the investor protection mechanisms under securities market purview shall be available for investments in such Digital Gold/ E-Gold products,” said SEBI.
The markets watchdog further stated that it has enabled investments in gold and gold-related instruments through various regulated gold products like exchange-traded commodity derivative contracts, Gold Exchange Traded Funds (ETFs) offered by Mutual Funds, and Electronic Gold Receipts (EGRs) tradeable on stock exchanges.
Notably, investments in these gold products can be made through SEBI-registered intermediaries, and are governed by the regulatory framework prescribed by the securities markets regulator.
How digital gold works
Digital gold functions much like an electronic receipt…
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