SEBI Bars Investment Advisors From Advising On Crypto Digital Gold

The capital markets regulator has warned that financial advisors cannot trade in unregulated products, thereby barring them from delivering any official advice on new-age asset classes like cryptocurrencies, non-fungible tokens (NFTs), and digital gold.

"Some registered Investment Advisers are engaging in unregulated activity by offering a platform for buying/selling/dealing in unregulated items including digital gold," SEBI warned in a statement.

“Investment Advisers are, hereby, advised to refrain from undertaking such unregulated activities. Any dealing in unregulated activities by Investment Advisers may entail action as deemed appropriate under the SEBI Act, 1992 and regulations framed thereunder,” it added.

The SEBI statement stated further that “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 Section 12(1) of the SEBI Act, 1992 read with the SEBI (Investment Advisers) Regulations, 2013.”

The SEBI announcement is significant since the number of Indians trading in Bitcoin and other cryptocurrencies, as well as NFTs and digital gold, has increased dramatically in recent years.

Some new-age investment and advice platforms also provide services for individuals to purchase digital assets, which are particularly popular among young and first-time investors, particularly millennials.