When you buy a share on the NSE, a specific machinery stands behind it: a clearing corporation guaranteeing settlement, a depository holding the security in your name, an investor protection fund, an ombudsman, and a regulator that can compel disclosure. None of that is free, and none of it applies to a product that sits outside the perimeter.
Inside an airport terminal, someone has checked the aircraft, licensed the pilot and insured the flight. The chartered helicopter from the field behind your house may be perfectly safe and may be flown by someone excellent. It is just that nobody checked, and if something goes wrong there is nobody to ask.
Regulation is not a guarantee of returns. It is a guarantee that specific people had specific duties to you, and that there is a defined place to go when those duties are not met.
What regulation actually buys you
| Protection | Inside SEBI's perimeter | Outside it |
|---|---|---|
| Settlement guarantee | The clearing corporation guarantees your trade even if the counterparty fails | You are exposed to whoever is on the other side |
| Custody | Securities sit in your demat account in your name | The platform holds it; you hold a claim on the platform |
| Segregation of your money | Client funds must be kept separate from the broker's own | Frequently no requirement at all |
| Disclosure | Mandated, standardised, periodic, audited | Whatever the seller chooses to publish |
| Complaint mechanism | SCORES, exchange arbitration, an ombudsman | The company's own support desk, then a civil court |
| Compensation fund | Investor protection funds exist for defined failures | None |
The specific cases
- 1Digital gold
Sold through payment apps in amounts as small as ₹10. It is not regulated by SEBI, the RBI or IRDAI — the vaulting arrangement is a private contract with the provider. Compare it with sovereign gold bonds and gold ETFs, both of which sit inside a regulated structure, before choosing convenience.
- 2Crypto and virtual digital assets
Legal to hold and trade, taxed at a flat 30% with a 1% TDS on transfers and no offset of losses against other income. Taxed is not the same as regulated: there is no custody requirement, no segregation of client funds, and no recourse when an exchange fails, as several have.
- 3Unlisted and pre-IPO shares
Genuine securities sold through private dealers at wide, opaque spreads. No exchange, no continuous price, and often no way to sell for years. The "pre-IPO at a discount" pitch frequently references an IPO that never happens.
- 4P2P lending
RBI-registered platforms, so partially regulated — but the credit risk is entirely yours, borrower by borrower. The advertised return is before defaults, and the platform does not guarantee anything however the marketing reads.
- 5Fractional real estate and unlisted bonds sold online
A fast-growing category. Ask who holds title, how you exit, and what the total cost is between what the asset earns and what you receive.
A position, not a prohibition
- Size it as though it could go to zero, because in the failure case it can — not through price, but through the custodian. For most households that is a low single-digit percentage of net worth.
- Never hold an emergency fund or a near-term goal there. The whole point of those is that they are available on the worst day, which is precisely when an unregulated venue is least reliable.
- Prefer the regulated version when one exists. Gold ETFs and sovereign gold bonds do what digital gold does, inside the perimeter, usually more cheaply.
- Keep records yourself. If the platform disappears, so does its statement history — and you will still owe tax on the gains.
- Read the exit terms before the entry terms. Almost every problem in this category is a liquidity problem wearing a returns costume.
A platform offers "digital gold from ₹10, stored in insured vaults". What is the main risk that differs from a gold ETF?
Module checkpoint: the paperwork of a financial life
5 questions. Answers are revealed once you submit all of them.
1.Why buy a personal health policy while you already have employer cover?
2.What does a higher basic salary do, holding CTC constant?
3.What makes the CAS more useful than a broker's portfolio page?
4.Why is a market fall in year two of retirement worse than in year twenty of saving?
5.What is the defining risk of an unregulated product?
Airport ke andar kisi ne jahaaz check kiya, pilot ka licence dekha, insurance karaya. Peechhe wale khet se udne wala helicopter shayad bilkul theek ho — bas kisi ne check nahi kiya. Sawaal yeh nahi ki legal hai ya nahi; sawaal yeh hai ki aapka maal kiske paas hai, aur woh doob gaya toh kya.
- Regulation buys custody, segregation, disclosure and a place to complain — not returns.
- Ask who holds the asset and what happens to it if they fail.
- Digital gold, crypto, unlisted shares and fractional property sit largely outside the perimeter.
- Being taxed is not the same as being regulated.
- Size these as though they could go to zero, and never park an emergency fund there.
Mark it done to track your progress through the curriculum.
Common questions
Short, direct answers to what people ask about this topic.
- is digital gold regulated by sebi
- No — digital gold sits outside SEBI, the RBI and IRDAI alike, and the vaulting arrangement is a private contract between you and the provider. The metal may well be there and insured, but your claim is on the company rather than on a regulated custody structure, with no settlement guarantee, no mandatory segregation of client money and no investor protection fund behind it. Gold ETFs do a similar job inside the regulated fund structure.
- what is the tax rate on crypto gains in india
- Gains on virtual digital assets are taxed at a flat 30% plus applicable cess, with no deduction allowed other than the cost of acquisition, and a 1% TDS applies on transfers. Losses cannot be set off against other income, cannot be carried forward, and cannot be set off even against gains on another virtual digital asset. Being taxed this way is not the same as being regulated — the tax code takes a share of the profit without offering any route to recover capital.
- the risk that the platform holding your asset fails rather than the asset losing value is known as
- Counterparty risk, usually discussed alongside custody risk. It is the risk that lives in the intermediary rather than in the price: if the platform holding your gold, crypto or unlisted shares collapses, your claim ranks alongside its other creditors regardless of what the underlying asset is worth. Inside SEBI’s perimeter, the clearing corporation, the depository and client-money segregation exist precisely to remove it.
- how do I check if someone giving investment advice is registered with sebi
- SEBI publishes searchable lists of registered investment advisers and research analysts on its own website, and the exchanges publish their registered members and brokers. Charging a fee for investment advice without that registration is an offence, and the familiar line that a channel shares ideas rather than advice does not change the position. Complaints against registered intermediaries go through SEBI’s SCORES platform.
- what happens to my money if an indian crypto exchange shuts down
- There is no settlement guarantee, no compensation fund and no ombudsman for virtual digital assets, so recovery becomes an ordinary claim against a private company — a slow civil process with an uncertain outcome. The assets are typically held in the exchange’s own wallets rather than in anything registered in your name, which is the practical difference from a share sitting in your demat account. Keeping your own transaction records matters too, because tax on past gains stays due whether or not the platform still exists.