The Advertising Standards Council of India (ASCI), a self-regulatory industry body, has issued guidelines for the promotion of virtual digital assets like cryptocurrency and non-fungible tokens (NFTs).
Indian authorities have, of late, strongly voiced their concerns over the “irresponsible” advertising of cryptocurrencies by social media influencers and celebrities. Their objection also pertains to the sponsorship of major sporting events. It is estimated that the country’s cryptocurrency exchanges have collectively spent more than 50 crore rupees ($6.7 million) during the ICC T20 World Cup in November 2021.
The Indian cryptocurrency market grew 641% over the period from July 2020 through June 2021, according to a crypto-analysis firm Chainalysis.
Several experts had also flagged the implications of misleading advertisements of digital assets.
ASCI has noted that these ads do not adequately disclose the risks associated with them.
What do the guidelines say?
The council wants a disclaimer to be displayed prominently on ads and promotions related to such digital assets. It must say:
Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.
The guidelines will be applicable to all virtual digital asset-related ads released on or after April 1. Some of the 12 guidelines are:
- In print, equal to at least one-fifth of the advertising space at the bottom of the advertisement in an easy-to-read font, against a plain background, and to the maximum font size afforded by the space.
- In the video ads, the disclaimer should be placed at the end of the advertisement against a plain background. A voiceover must accompany the disclaimer in the text. The voiceover should be at a normal speaking pace and must not be hurried.
- In social media posts, such a disclaimer must be carried in both the caption as well as any picture or video attachments. The disclaimer within the caption must be placed upfront at the beginning of the post. Where social media posts or advertisements have restrictions on text in the static picture, the disclaimer must be carried upfront in the caption before the fold.
- In formats where there is a limit on characters, like Twitter, the disclaimer must be shortened to: “Crypto products and NFTs are unregulated and risky,” followed by a link to the full version.
“We had several rounds of discussion with the government, finance sector regulators, and industry stakeholders before framing these guidelines,” said Subhash Kamath, chairman of ASCI. “Advertising of virtual digital assets and services needs specific guidance, considering that this is a new and as yet an emerging way of investing.”
Calling these guidelines “long due,” Sathvik Vishwanath, co-founder and CEO of Unocoin said it would now allow “an even playing field” for investors to make informed decisions.
“Many crypto projects in India have taken advantage of the fact that it is still unregulated in nature and were publishing misleading and pushy advertisements without appropriate disclaimers,” Vishwanath said.