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SEBI directs investment advisers not to deal with unregulated products like digital gold, crypto

This follows Sebi's observation that certain registered investment advisers are engaging in unregulated activity by offering a platform for the purchase, sale, or trading of unregulated items, including digital gold.

The capital markets regulator SEBI directed financial advisers on Thursday to abstain from trading in digital gold, an unregulated product. This follows Sebi’s observation that certain registered investment advisers are engaging in unregulated activity by offering a platform for the purchase, sale, or trading of unregulated items, including digital gold.

“Undertaking such unregulated activity including dealing (i.e., advisory, distribution, and execution/ implementation services) in digital gold by investment Advisers 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, Sebi has requested that investment advisers abstain from engaging in such unregulated activities.  Additionally, it stated that investment advisers engaging in unregulated activities may face sanctions under the Sebi Act and its implementing regulations.

The National Stock Exchange (NSE) issued a directive in August directing its members, including stockbrokers, to cease selling digital gold on their platforms by September 10.

The order came after the capital markets regulator discovered that certain members offer their clients a platform for buying and selling digital gold.

The Securities and Exchange Board of India (Sebi) advised the exchange via letter dated August 3 that the stated activity violates the Securities Contracts (Regulation) Rules (SCRR), 1957, and that members should abstain from such transactions.

The SCRR standards prohibit members from engaging in any activity other than securities or commodities derivatives, except as a broker or agent, that does not involve personal financial liability.

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