Is digital gold safe? What protects your gold and what does not

Digital gold is real gold that a provider buys and stores for you, and you see your holding as a balance in an app. Its safety has two separate parts. One is the gold price, which can fall in any form of gold. The other is the arrangement behind it: who sells and holds the gold, who checks it, and what the provider's contract says if something goes wrong.

SEBI is the Securities and Exchange Board of India, the regulator of the securities market. Digital gold is not regulated by SEBI. In November 2025 SEBI said such products are "neither notified as securities nor regulated as commodity derivatives" and that its investor-protection mechanisms do not apply to them. Gold ETFs and gold mutual funds are SEBI-regulated.

So for the second part, you rely on each provider's own terms rather than on SEBI.

Is digital gold safe?

Digital gold carries two kinds of risk, so keep them apart. The gold price can fall, and SEBI does not oversee the arrangement behind your gold.

Take the price first. It applies to every form of gold, digital or not. RBI's yearly averages for Mumbai put gold 12.0% lower in 2015-16 than in 2012-13. The average got back above its 2012-13 level only in 2018-19. Gold in your portfolio looks at what gold does and does not do for a portfolio.

The second part is the arrangement. Nobody can say "safe" or "unsafe" about it in general, because it depends on which provider you use and what that provider's contract says. The sections below set out what we can say.

Who holds your gold with SafeGold and MMTC-PAMP?

On Koshex, digital gold comes from two providers, SafeGold and MMTC-PAMP. Each says on its own website where the gold is kept and that a trustee acts for customers.

A few terms help here. A vault is the secure place where the gold is stored. A custodian is the firm that keeps the gold for the provider. A trustee is an independent company appointed to act for the customers. A charge is a legal right over property that ranks ahead of other creditors.

SafeGold. SafeGold's own FAQ says the gold bought through it is stored in Brink's vaults. It says the storage firm carries insurance that includes cover on your gold, and that SafeGold has its own cover while the gold is in transit. SafeGold's terms say the cover includes fire, lightning, theft, cyclone, earthquake and flood, among other events. They also say it does not cover losses from events such as war, revolution or nuclear radiation.

SafeGold's FAQ adds that a security trustee has been appointed and that customers can approach the trustee with grievances. It says an independent auditor or trustee confirms the balances with the custodian each quarter and reconciles them with customer balances. In plain words, someone outside the company compares the gold in the vault with what customers are shown as owning.

MMTC-PAMP. MMTC-PAMP's own page says it is the seller, and that the partner app is only a platform for reaching its Gold Accumulation Plan. It says the gold is kept in bank-grade, secured and insured lockers at MMTC-PAMP's own facility. It names Universal Trusteeship Services Ltd. as the trustee for the gold that customers buy.

These are statements by the providers. They are not Koshex terms and they are not law, and a provider can change them.

Is digital gold regulated by SEBI, and did SEBI ban it?

No, digital gold is not regulated by SEBI, and SEBI has not banned it. Its press release of 8 November 2025 is a caution to the public, and it orders nothing.

The release is PR No. 70/2025, "Caution to public regarding dealing in 'Digital Gold'". It says some online platforms offer "Digital Gold/E-Gold Products" and market them as an alternative to investing in physical gold. SEBI warned that these products are neither securities nor commodity derivatives. It said they operate entirely outside its purview. It also said none of the investor-protection mechanisms under securities market purview are available for them.

SEBI also said such products "may entail significant risks for investors and may expose investors to counterparty and operational risks". Two ideas sit in that sentence:

• Counterparty risk is the company on the other side not doing what it promised.
• Operational risk is things going wrong in how that company runs.

SEBI pointed investors who want regulated gold to the products it does regulate. These are exchange-traded commodity derivative contracts, Gold Exchange Traded Funds offered by mutual funds, and Electronic Gold Receipts traded on stock exchanges. They are bought through SEBI-registered intermediaries.

What about the RBI? No RBI approval for digital gold was found. SafeGold's own FAQ says it is "neither a Collective Investment Scheme nor a Deposit", so it does not fall under the purview of SEBI or the RBI. The gold product the RBI issues for the Government is the Sovereign Gold Bond, a government security counted in grams of gold. The last issue was in February 2024.

What happens if the provider or the app shuts down?

It depends on the provider's own terms, because no SEBI investor-protection scheme applies to digital gold.

If SafeGold fails. SafeGold's own terms say the gold behind your account is held apart from the company's other assets. They say a trustee holds a charge over it for customers, and that the ownership of the gold rests with the customer. If SafeGold fails, the terms say a trustee administrator lists all customers and informs each one directly or through the SafeGold partner. The terms then split customers by holding:

• Holders of less than 1 gram are paid at market rates on a specified date.
• Holders of more than 1 gram get 30 days to pay the charges for making the gold into coins and delivering it and ask for delivery. If they do not, the holding is sold at market rates.

If a seller app stops, with MMTC-PAMP. MMTC-PAMP's own page says the gold is then held as physical gold under your direct ownership. You can still hold it and can sell or take delivery later by contacting MMTC-PAMP's customer care. After validation, the page says the amount is transferred within 48 hours. It also says that transfer and gifting are switched off for customers whose seller is not active.

Both sets of terms are contract terms, not a scheme backed by SEBI. A provider can change its terms, so read the current ones before you buy.

How is digital gold different from gold ETFs, gold funds and EGRs?

All four follow the gold price. The difference is regulation: gold ETFs, gold funds of funds and Electronic Gold Receipts are SEBI-regulated, and digital gold is not.

Some plain meanings first:

• A gold ETF is a fund whose units trade on the stock exchange. It keeps at least 95% of its assets in gold and gold-related instruments.
• A gold fund of funds is a mutual fund that keeps at least 95% of its assets in gold ETFs.
• An Electronic Gold Receipt (EGR) stands for gold held by a SEBI-registered vault manager. It sits in your demat account, the account that holds such units in electronic form.
• The expense ratio is a fund's yearly fee, shown as a percentage of your money and taken out of the fund's value.

Take someone with ₹20,000 of gold savings. In a gold fund of funds, SEBI's 0.90% cap on total cost, including the ETF it holds, means at most ₹180 a year.

HDFC's factsheet for 31 August 2026 shows an expense ratio of 0.47% for the regular plan of HDFC Gold ETF FoF, which on ₹20,000 is ₹94 a year. A regular plan is the version of a fund bought through a distributor such as Koshex, who helps you choose and stays with you afterwards. Koshex offers gold funds in that form.

Digital gold has no expense ratio of this kind. Both providers say its costs include GST in the buying price and a gap between buying and selling prices, and each provider sets its own storage terms. What digital gold costs covers them.

The table shows how the arrangements differ. It does not rank them, because all four carry the same gold price risk. Digital gold vs gold mutual funds compares them in full, and ETF vs FoF explains the two fund routes.

What should you check before buying digital gold?

Check who sells the gold, where it is stored, who checks it, and what the provider's terms say if it fails.

Then read the terms on selling, delivery and storage, and whether the provider says the gold is insured and how often someone checks it against customer balances.

Where to buy digital gold has a longer checklist for comparing providers. How long you can hold digital gold covers storage periods. For the rest, see digital gold on Koshex and the other ways to own gold in ways to invest in gold. If you prefer SEBI-regulated gold, gold funds are one such route.