SEBI bars investment advisors from advising on crypto, digital gold

In a move that could effectively bar registered investment advisors from offering any official advice on new-age asset classes like cryptocurrencies, non-fungible tokens (NFTs) and digital gold, the capital markets regulator has said that investment advisors can't deal in unregulated products.

“It has come to the notice of SEBI that some registered Investment Advisers are engaged in unregulated activity by providing a platform for buying/selling/dealing in unregulated products including digital gold,” stated a release by SEBI.

“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.

Also read: PB Fintech, Policybazaar's parent firm, gets Sebi approval for Rs 6,017-cr IPO

The SEBI statement further highlighted the fact 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 statement assumes significance as the recent past has seen an exponential rise in the number of Indians trading in products like Bitcoins and other cryptocurrencies along with NFTs and digital gold.

Some of the new-age investment and advisory platforms also offer facilities wherein individuals can buy digital assets, which are quite popular with the young and first-time investors especially millennials.

Also read: SEBI bars NCDEX from launching new mustard seed contracts

Also read: Sebi forms high powered advisory panel on settlement orders