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Securities and Exchange Board of India (Sebi)-registered investment advisors are not allowed to deal in unregulated products such as digital gold, the capital markets regulator clarified in a press release on Thursday.

On 26 August, exchanges had prohibited stock brokers from dealing in digital gold. Investment advisors cannot offer advisory, distribution or execution services for digital gold, and such unregulated activities could attract penal action under the SEBI Act, 1992, the regulator added.

Fintech firms registered as investment advisors with Sebi offered digital gold services, wherein customers could buy small quantities of digital gold on the apps and the gold would be stored with partner firms. In some cases, the platforms were referring clients to partner firms instead of offering the product directly.

On 10 September, Paytm Money, which is registered as an investment advisory, had in a blog post said that digital gold will only be available on the ‘Paytm’ app and not on Paytm Money.

“Digital gold is a product offered by Paytm, which is not a stockbroker or investment advisor. Due to which, our services will remain unaffected and you can continue to buy/sell or track your digital gold seamlessly on the Paytm app," the company had said in the blog post.

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