Financial and legal experts in India have raised frequent concerns over the lack of guidelines regarding advertisements by digital currency companies. Lack of formal guidelines governing the digital currency advertisement in India, unlike other products like mutual funds, has been an issue for many.
However, to their respite, the Advertising Standards Council of India (ASCI) has recently released a 12-point guideline for digital currency advertisements, among these a few are:
- All virtual digital assets (VDAs) should carry the disclaimer: “Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.” These disclaimers should be prominent and unmissable to an average consumer.
- Advertisers should not use words like currency, securities custodian, and depositories in advertisements.
- Advertisements should include advertiser’s name and contact details.
- Advertisements should not include misleading statements that guarantee or promise future increase in profits.
- Advertisers should not feature miners in their advertisements.
According to the ASCI, all VDA advertisements published on or after April 1 must follow the guidelines. The disclaimer will have to be carried in promotional content on print, video, and audio, and a shortened disclaimer needs to be used if there is a limit on characters, followed by a link to the full disclaimer. Celebrities who appear in digital currency or NFT advertisements should exercise “caution” to ensure that they have done their research about the statements and claims make in the advertisements to not mislead the consumers.
The ASCI has strongly objected to the “irresponsible” advertising of digital currencies by Bollywood celebrities like Ayushmann Khurrana and Ranveer Singh, referring to it as misleading. The authorities also objected to the sponsorship of sporting events like ICCWorld Cup in 2021 by the country’s digital currency exchanges like CoinDCX. The exchanges collectively spent over $6.7M during that tournament.
“More so, they also made recommendations against depicting minors in advertisement about digital currencies and assets, since including underage kids and even those in their late teens, is not appropriate,” Vikram Kanwar, a journalist from India, told CoinGeek.
The largest number of digital currency investors are from a very young demographic in India. “Some are investing with the permission and money of their parents, but there are many who are selling their personal things and using their pocket money to invest in different types of digital currencies without understanding the financial or legal repercussions,” Kanwar added.
Will these guidelines help?
ASCI chairman Subhash Kamath, said in a statement: “We had several rounds of discussion with the government, finance sector regulators, and industry stakeholders before framing these guidelines. Advertising of virtual digital assets and services needs specific guidance, considering that this is a new and as yet an emerging way of investing. Hence, there is a need to make consumers aware of the risks and ask them to proceed with caution.”
“Well, the warning signs and guidelines don’t do much,” Ankit Kohli, Operations manager of a financial company in India, said. Let’s take an example of cigarettes, he continued, stating that the disclaimers and “warning texts” didn’t reduce the consumption of cigarettes as such. “But the government ban on making advertisements altogether, plus levying heavy taxes on them did the job.”