Yet, the investment landscape has shifted dramatically with digital gold apps promising hassle-free, fraction-based ownership starting at ₹100—no making charges, no storage woes.
Platforms like Paytm, Google Pay, and PhonePe have fueled this boom, especially among tech-savvy youth, with investments surging 377% in 16 months post-UPI integration.
However, the Securities and Exchange Board of India (SEBI) dropped a bombshell in November 2025 with an advisory cautioning against digital gold holdings.
This isn't mere bureaucracy; it's a wake-up call amid rising cyber threats and regulatory voids. A recent cyber attack on Aditya Birla Capital Digital's ABCD app saw ₹1.95 crore in digital gold vanish—restored swiftly due to the group's repute, but what about smaller players?
The Core Risks in Digital Gold Investments
SEBI highlights two lethal pitfalls: counterparty risk and operational risk. Counterparty risk means if the app's backend company folds or ghosts you, your fractional gold evaporates with no recovery mechanism. Operational risk questions the promised physical backing—do these firms truly vault equivalent gold in certified storage? Without audits, it's faith-based finance.
Even trusted names like MMTC-PAMP, a government-Swiss joint venture and India's largest refiner accredited by the London Bullion Market Association, fall outside SEBI's purview. No regulator oversees these digital gold platforms, leaving investors exposed. As SEBI notes, disputes, thefts, or failures lack resolution paths—no insurance, no governmental backstop.
This advisory stems from explosive growth: Month-on-month inflows signal a market segment ripe for exploitation. Cyber attacks could scale massively, eroding trust in a $3.8 trillion ecosystem.
Safer Paths: Gold ETFs and Electronic Gold Receipts
SEBI isn't killing the gold dream; it's redirecting it to regulated avenues. Enter Gold ETFs—exchange-traded funds mirroring physical gold prices. Asset managers buy actual gold, verified under SEBI oversight, and issue tradable units. Prices fluctuate with spot rates; sell high for capital gains. No storage headaches, full transparency.
Then there's the Electronic Gold Receipts (EGRs) framework under WDRA (Warehousing Development and Regulatory Authority). Importers deposit gold in accredited vaults; managers assay, certify, and issue tradable EGRs on exchanges. Investors buy these digital receipts, redeemable for physical gold or sellable for profits—all SEBI-regulated.
Derivatives offer speculative plays, but for ownership, ETFs and EGRs reign supreme.
Opinion: Time for Regulatory Overhaul and Investor Caution
India's gold obsession drives imports—the second-largest after oil—ballooning the current account deficit. Digital gold seemed innovative, democratizing access. But unchecked, it invites fraud in a cyber-vulnerable era.
SEBI's warning is prudent, urging a pivot to regulated gold investments like ETFs (e.g., Nippon India Gold ETF) and EGRs. Future regulations may collaborate with RBI for audits, real-time verifications, and accreditation. Investors: Redeem digital holdings now; transparency trumps convenience.
Gold remains a safe haven, but only through regulated channels. As prices projected to rise in 2026, choose wisely—your wealth deserves ironclad protection.
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