Daijiworld Media Network – Mumbai

Mumbai, Nov 13: Zerodha co-founder and CEO Nithin Kamath has cautioned investors against purchasing digital gold, calling it an unregulated and costly investment option. His warning comes soon after the Securities and Exchange Board of India (SEBI) issued an advisory urging investors to stay away from unregulated products like digital gold.

In a post on X, Kamath explained that most people are unaware that digital gold is not regulated by any authority, which leaves investors with little protection if the platforms selling it face issues. He said that buying digital gold can immediately result in a loss of nearly six percent due to taxes and price spreads.

Kamath pointed out that investors pay three percent GST at the time of purchase, along with another two to three percent spread, meaning buyers lose around six percent instantly, even before considering regulatory risks.

He suggested that investors seeking gold exposure should consider safer and regulated alternatives such as Gold Exchange-Traded Funds (ETFs), adding that they remain one of the safest and most convenient options now that Sovereign Gold Bonds (SGBs) have stopped.

SEBI, in its advisory dated November 8, stated that digital gold is neither recognised as a security nor regulated as a commodity derivative. The regulator warned that digital gold products differ from SEBI-regulated gold investments and offer no investor protection under the existing framework.

The advisory followed a sharp rise in gold demand across India amid global economic uncertainty and geopolitical tensions, which have pushed gold prices up by more than 50 percent in 2025. Reports indicate that UPI transactions in digital gold have also increased significantly, from Rs 760 crore in January to nearly Rs 1,180 crore by August.

SEBI has advised investors to choose safer investment options such as physical gold, Gold ETFs, or Exchange-Traded Commodity Derivative Contracts.