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RAS question

As per SEBI's November 8, 2025 advisory on Digital Gold, which of the following statements is CORRECT?

Correct answer: (C) Digital gold is outside SEBI's purview and investor protection mechanisms do not apply.

SEBI's November 8, 2025 advisory states that Digital Gold or E-Gold products operate outside SEBI's purview, so securities-market investor protection mechanisms do not apply to them.

  1. (A)

    Digital gold is regulated by SEBI as a commodity derivative

  2. (B)

    Digital gold falls under RBI's payment system regulations

  3. (C)

    Digital gold is outside SEBI's purview and investor protection mechanisms do not apply

  4. (D)

    Digital gold is a recognised security under the Securities Contracts (Regulation) Act

Explanation

SEBI's advisory warns investors that Digital Gold or E-Gold products sold through digital or online platforms are not the same as SEBI-regulated gold products. SEBI-regulated routes include exchange-traded commodity derivative contracts, Gold ETFs offered by mutual funds, and Electronic Gold Receipts tradable on stock exchanges. By contrast, Digital Gold products are neither notified as securities nor regulated as commodity derivatives, and SEBI says they operate entirely outside its purview. That is why the investor protection mechanisms available under the securities-market framework do not cover Digital Gold investors. The advisory also flags significant investor risks, including counterparty and operational risks, while regulated alternatives include Gold ETFs, Sovereign Gold Bonds, and EGRs on IIBX.

Why the other options are wrong

  • (A) Digital Gold is not regulated by SEBI as a commodity derivative; the advisory expressly distinguishes it from exchange-traded commodity derivative contracts.
  • (B) The advisory does not place Digital Gold under RBI payment system regulation; it treats Digital Gold as outside SEBI's securities-market framework and warns that SEBI investor protections are unavailable.
  • (D) Digital Gold is not a recognised security under SEBI laws, because the advisory says these products are neither notified as securities nor regulated as commodity derivatives.

Concept

Financial-market regulation and investor protection fall within the Indian Economy syllabus area. RAS often asks about such advisories because they separate regulated investment products from lookalike market offerings.

Source

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