Sebi: The Sebi has requested that financial advisers desist from trading in digital gold.

Sebi, the capital markets regulator, advised financial advisors on Thursday not to trade in digital gold, which is an unregulated product. Sebi discovered that certain registered investment advisors are engaging in unregulated activity by offering a platform for purchasing, selling, or trading in unregulated goods such as digital gold.
“Undertaking such unregulated activity by investment Advisers, including dealing (i.e., advisory, distribution, and execution/implementation services) in digital gold is not in accordance with the provisions…of the Sebi Act, 1992 read with the Sebi (Investment Advisers) Regulations, 2013,” the regulator said in a statement.

As a result, the Sebi has advised investment advisers to avoid from engaging in such unregulated activity.

It went on to say that any trading in unregulated activities by investment advisors might result in action under the Sebi Act and the rules ensuing from it.

The National Stock Exchange (NSE) instructed its members, including stockbrokers, in August to stop selling digital gold on its platforms by September 10.

The directive came after the capital markets regulator saw that certain members are offering their clients a platform for buying and selling digital gold.

The Securities and Exchange Board of India (Sebi) warned the exchange in a letter dated August 3 that the aforementioned conduct is in violation of the Securities Contracts (Regulation) Rules (SCRR), 1957, and that members should desist from such deals.

The SCRR standards prohibit members from operating in any activity other than securities or commodities derivatives as a principal or employee, save as a broker or agent with no personal financial obligation.

According to TradeSmart Chairman Vijay Singhania, digital gold units are not issued by any regulated company. There is no way to determine whether a digital gold certificate is backed by actual gold.