Is your Gold safe? Think again, the real risk lies in something called digital gold.
- Kiran S N
- Nov 12, 2025
- 3 min read
It sounds like the perfect idea. Buy gold with just a few taps on your phone, skip the jeweller, and own pure 24K gold stored safely in a vault somewhere. That is the promise of digital gold, and it has taken India by storm.
But here’s the problem. It is not regulated by SEBI, RBI, or any government body. And that makes it a risky bet, no matter how shiny it looks.
What Exactly Is Digital Gold?
Digital gold lets you buy small quantities of physical gold online through apps or payment platforms. In theory, it is backed by real gold stored in secure vaults under your name. The pitch is simple: easy, pure, and accessible to everyone.
Except, there is a catch. It is based entirely on trust. You are relying on the company’s word that the gold exists, is stored safely, and that you can claim it when you want.
Why SEBI Is Ringing Alarm Bells
SEBI recently issued a warning highlighting a key risk. Digital gold operates outside any regulatory framework.
That means anyone can launch a platform and start selling it. There is no legal oversight or investor protection. The gold you “own” exists only as part of a private agreement with that company.
So if the company shuts down or goes bankrupt, your investment gets mixed in with its liabilities. In plain terms, you will be standing in line with other creditors, hoping to recover something.
The Hidden Risks Behind the Shine
Counterparty Risk
You are not really buying gold. You are buying a promise from the platform. If that promise breaks, you have no safety net.
No Segregation or Transparency
There is no clarity on whether your gold is stored separately or lumped together with others. Are you the legal owner of a specific gold bar, or just another name in a database?
Pricing and Liquidity
Each platform sets its own buy or sell prices. There is no standardised market rate, and the spreads can be wide, sometimes 2 to 3 per cent. So even before you sell, you are already behind.
Tax and Fees
Here is where it really stings. You pay 3% GST upfront, just like buying jewellery. Add another 2% to 3% in hidden platform charges such as vaulting, insurance, and logistics.
Effectively, if you invest ₹10,000, you lose ₹500 to ₹600 instantly. That is a 5% to 6% head start in the wrong direction.
“But It’s So Convenient…” The Common Defence
It’s easy. But so is downloading a shady app that promises double returns. Convenience should never come at the cost of legal protection.
Because if the platform goes under, there is no regulator stepping in. No SEBI, no RBI, no investor protection fund. Just you, a contract, and a long legal wait.
The Smarter Alternatives
If you want exposure to gold, and there is nothing wrong with that, there are safer SEBI-regulated ways to do it.
Gold ETFs provide transparency, are traded on exchanges, and are fully regulated.
Gold Mutual Funds are professionally managed and backed by audited gold holdings.
Electronic Gold Receipts (EGRs) are a newer, regulated option that gives you legal ownership of gold stored in recognised vaults.
These options may sound less “modern” than buying gold through an app, but they are backed by laws, not promises.
The Bottom Line
Digital gold might look like the future of gold investing, but right now, it is an unregulated shortcut with serious risks. You are paying taxes upfront, losing money to hidden fees, and taking on the full counterparty risk of a private company, all for something that is supposed to be safe.
SEBI’s warning is clear. Do not let the shine blind you. Convenience does not equal safety, especially when it comes to unregulated investments.
Disclaimer: This content is for educational purposes only; please conduct personal research and consult a qualified investment advisor before making any investment decisions.
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