'A subpar way to get exposure to gold': Nithin Kamath warns digital buyers face 6% loss, no safety
The bigger concern: digital gold isn’t backed by SEBI or any recognized authority. While gold ETFs and sovereign bonds come with a web of custodians, trustees, and disclosure norms, digital gold relies on private contracts between the buyer and seller.
- Nov 13, 2025,
- Updated Nov 13, 2025 11:34 AM IST
Digital gold may look harmless on your favorite app — but Zerodha CEO Nithin Kamath warns it’s a “completely unregulated” product where investors can lose money instantly and have zero protection if a platform collapses.
In a pointed LinkedIn post, Kamath amplified a recent caution from SEBI, India’s securities regulator, stressing that digital gold — despite its sleek digital packaging — is not covered by any regulatory framework. “Most people don’t realize that nobody regulates digital gold,” he wrote, adding that if something goes wrong, “there’s not much you can do.”
The product’s popularity has soared. According to ET Wealth, UPI transactions in digital gold ballooned from ₹760 crore in January to ₹1,180 crore by August 2025. But Kamath says investors are jumping in without understanding the real risks.
Chief among them is the cost. Every digital gold purchase attracts 3% GST upfront, and buyers face platform spreads of another 2–3%. That means investors start off with a 5–6% loss — before even accounting for the risk of platform failure. “You’re instantly looking at a ₹500–₹600 loss on a ₹10,000 investment,” Kamath said.
The bigger concern: digital gold isn’t backed by SEBI or any recognized authority. While gold ETFs and sovereign bonds come with a web of custodians, trustees, and disclosure norms, digital gold relies on private contracts between the buyer and seller. “Anyone can start an app and sell digital gold to you,” Kamath said. “There’s nobody checking after them.”
Even if a platform claims to store physical gold, buyers have no way of verifying if their holdings are segregated, independently audited, or even accessible in the event of bankruptcy. “You’re betting all that money purely on the trust you have in an app,” Kamath warned.
SEBI’s caution note reminded investors of safer, regulated alternatives like gold ETFs, electronic gold receipts (EGRs), and commodity derivatives — all of which offer price transparency and legal protections. A proposed SEBI-regulated gold exchange, announced in Budget 2021-22, remains in limbo.
Kamath concluded by calling digital gold “a subpar way to get exposure to gold” and urging investors to consider more secure options. “Gold ETFs remain one of the safest and easiest ways to get exposure,” he said.
Digital gold may look harmless on your favorite app — but Zerodha CEO Nithin Kamath warns it’s a “completely unregulated” product where investors can lose money instantly and have zero protection if a platform collapses.
In a pointed LinkedIn post, Kamath amplified a recent caution from SEBI, India’s securities regulator, stressing that digital gold — despite its sleek digital packaging — is not covered by any regulatory framework. “Most people don’t realize that nobody regulates digital gold,” he wrote, adding that if something goes wrong, “there’s not much you can do.”
The product’s popularity has soared. According to ET Wealth, UPI transactions in digital gold ballooned from ₹760 crore in January to ₹1,180 crore by August 2025. But Kamath says investors are jumping in without understanding the real risks.
Chief among them is the cost. Every digital gold purchase attracts 3% GST upfront, and buyers face platform spreads of another 2–3%. That means investors start off with a 5–6% loss — before even accounting for the risk of platform failure. “You’re instantly looking at a ₹500–₹600 loss on a ₹10,000 investment,” Kamath said.
The bigger concern: digital gold isn’t backed by SEBI or any recognized authority. While gold ETFs and sovereign bonds come with a web of custodians, trustees, and disclosure norms, digital gold relies on private contracts between the buyer and seller. “Anyone can start an app and sell digital gold to you,” Kamath said. “There’s nobody checking after them.”
Even if a platform claims to store physical gold, buyers have no way of verifying if their holdings are segregated, independently audited, or even accessible in the event of bankruptcy. “You’re betting all that money purely on the trust you have in an app,” Kamath warned.
SEBI’s caution note reminded investors of safer, regulated alternatives like gold ETFs, electronic gold receipts (EGRs), and commodity derivatives — all of which offer price transparency and legal protections. A proposed SEBI-regulated gold exchange, announced in Budget 2021-22, remains in limbo.
Kamath concluded by calling digital gold “a subpar way to get exposure to gold” and urging investors to consider more secure options. “Gold ETFs remain one of the safest and easiest ways to get exposure,” he said.