To protect the interest of investors and ensure that advertisements do not mislead or exploit consumers’ lack of expertise on crypto assets, India’s advertising industry self-governing body has released guidelines for advertising virtual digital assets. The guidelines were released after consultation with industry stakeholders, including government.
The Advertising Standards Council of India (ASCI) has noted that while the government continues to work on the framework for Virtual Digital Assets (VDAs), commonly referred to as crypto or non-fungible token (NFT) products, advertising for these products has been very aggressive in recent months. “ASCI noted that several of these advertisements did not adequately disclose the risks associated with these products,” it said in a statement.
As per the guidelines, all advertisements related to virtual digital assets published on or after April 1 must carry the following disclaimer: “Crypto products and NFTs are unregulated and can be very risky. no regulatory remedy for any loss resulting from such transactions.” The disclaimer shall be carried in print, video and audio promotional content.
In print or static, the disclaimer must be at least 1/5th the ad space at the bottom of the ad in an easy-to-read font, on a solid background, and at the font size maximum allowed by the space.
In audio, the disclaimer should be spoken at the end of the ad and the voiceover should be at a normal speaking rate and should not be rushed. The guidelines also cover social media posts.
The advertising body also banned advertisers from using the words “currency”, “securities”, “custodian” and “custodians” in advertisements for VDA products or services because “consumers associate these terms with regulated products” .
Additionally, advertisements that provide information about the cost or profitability of VDA products must contain clear, accurate, sufficient, and up-to-date information. “For example, ‘zero cost’ should include all costs that the consumer could reasonably associate with the offer or transaction. Information about past performance should not be provided in a partial or biased manner. Returns for periods less than 12 months should not be included,” ASCI said.
These guidelines put advertisements for crypto assets on a par with other financial instruments such as stocks and mutual funds, which have carried disclaimers for some time.
The regulations follow the government’s announcement of tax rules for crypto assets in the budget.
On February 1, the government had introduced a 1% flat tax on gains from crypto assets and a 1% withholding tax on each crypto transaction.
Shivam Thakral, CEO of BuyUcoin, a local cryptocurrency exchange, said: “We are happy that we finally have clear ASCI advertising guidelines for crypto advertising in India. If we look at the existing crypto advertisements, they already carry risks – investor-related disclaimers, as mentioned in the latest ASCI guidelines.We believe that disclosure guidelines should be common to asset-based investing, clearly emphasis on communicating the associated risks to investors.
Per ASCI guidelines, advertisements for VDA products or exchanges are prohibited from showing a minor dealing with crypto products. Additionally, advertisements may not show that VDA products or VDA commerce could be a solution to money problems, personality problems, or other such inconveniences.
Manisha Kapoor, Secretary General of ASCI, said: “We have seen a flurry of advertisements for virtual digital assets that could jeopardize consumer interest in the absence of certain safeguards. The use of celebrities and high-decibel advertising would attract consumers to these offers, without full disclosure of the risks. Given that this is, for now, an unregulated space, it is all the more important that advertising is upfront about the risks associated with these products.”
Further, no advertisement may contain statements that promise or guarantee increased future profits. Additionally, advertisements for crypto products also cannot be compared to any other regulated asset class.
For brand ambassadors, the guidelines suggest that, since this is a risky category, celebrities or prominent figures appearing in such advertisements should take extra care to ensure that they have demonstrated due diligence regarding statements and claims made in the advertisement.
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