Capital markets regulator Sebi is not looking to regulate ‘digital gold’ or ‘e-gold’ products as these do not fall under its purview, Sebi chairman Tuhin Kanta Pandey said on Friday.
Speaking on the sidelines of the National Conclave on REITs and InvITs-2025, Pandey said that regulated gold-related investments can be made through exchange-traded funds (ETFs) offered by mutual funds or through other tradable gold securities.
The clarification came days after the digital gold industry urged Sebi to bring digital gold platforms under formal regulation. Earlier this month, Sebi had warned investors against investing in digital or e-gold products, saying such instruments fall outside its regulatory framework and involve significant risks.
The cautionary statement came after Sebi observed that some online platforms have been promoting ‘digital gold’ or ‘e-gold’ products as an easy alternative to investing in physical gold.
“In this context, it is informed that such digital gold products are different from Sebi-regulated gold products as they are neither notified as securities nor regulated as commodity derivatives. They operate entirely outside the purview of Sebi,” the regulator had stated.
“Such digital gold products may entail significant risks for investors and may expose investors to counterparty and operational risks,” it had added. Sebi had further clarified that investor protection mechanisms applicable to regulated securities will not extend to such unregulated digital gold schemes. The regulator had stated that investors can gain exposure to gold through Sebi-regulated instruments such as Gold ETFs offered by mutual funds, exchange-traded commodity derivative contracts, and Electronic Gold Receipts tradable on stock exchanges.
REIT/InVIT glide path
Sebi plans to engage with industry stakeholders to include REITs (real estate investment trusts) in market indices, a move expected to boost liquidity for these instruments significantly.
“Sebi will work with all stakeholders to facilitate the inclusion of REITs in indices,” Pandey said at the event.
REITs are companies that own and operate real estate. They offer investors an opportunity to own high-priced real estate and earn dividend income to boost their capital over time.
The Sebi chief highlighted that the regulator is also evaluating additional measures to ease doing business for REITs and InvITs (infrastructure investment trusts).
As part of these efforts, Sebi is examining a proposal to broaden the pool of liquid mutual fund schemes in which REITs and InvITs can invest, while ensuring investor protection. Pandey said the regulator is exploring whether private InvITs may be allowed to invest in greenfield projects, provided adequate safeguards are in place.
MF review
Sebi plans to undertake a comprehensive review of its mutual fund and stock broker regulations at its board meeting next month, as it seeks to make these frameworks more relevant and efficient, a senior official said on Friday.
The issues will be taken up at the board meeting scheduled for December 17, the official added. Sebi has already released consultation papers on both sets of regulations.
In October, the regulator issued a consultation paper proposing an overhaul of mutual fund rules, including a clearer definition of the total expense ratio (TER) and revised limits on brokerage charges.