Digital gold purchases surged 110% year-on-year ahead of India's festive season, as buyers increasingly shifted from physical gold to app-based platforms. Despite this rapid growth, SEBI has repeatedly cautioned that digital gold is not regulated under any financial regulatory framework in India — not by SEBI, RBI, or IRDAI. Buyers hold no statutory investor protection. The product is sold through fintech apps as fractional ownership of physically stored gold, but no regulator formally oversees these platforms.

Digital gold allows buyers to purchase fractional quantities of gold online, typically starting from ₹1, with the physical gold held in insured vaults by entities like MMTC-PAMP, SafeGold, or Augmont. The purchase happens through third-party apps — often payment wallets or stockbrokers — who act as distribution partners.

The critical regulatory gap: digital gold does not fall under SEBI's securities regulation (it is not a security or mutual fund), it is not a bank deposit (so RBI rules don't apply), and it is not an insurance product. This places it in a regulatory vacuum.

SEBI first flagged this concern in 2021, directing its registered intermediaries (brokers, mutual fund distributors) to stop selling digital gold by September 2021. However, the underlying digital gold platforms themselves are not SEBI-regulated entities, so SEBI's jurisdiction is limited to its own intermediaries, not the product.

For exam purposes, understand the distinction between regulated gold investment instruments — Sovereign Gold Bonds (RBI-regulated, issued by GoI), Gold ETFs (SEBI-regulated, traded on exchanges), and Gold Mutual Funds (SEBI-regulated) — versus unregulated digital gold sold through apps. The 110% YoY surge despite warnings illustrates the gap between regulatory intent and market behaviour, a classic fintech regulatory arbitrage scenario that examiners test through statement-based MCQs.