BackASCI releases guidelines for ads, promotion of crypto assets, services
ASCI said the ads must 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’
PremiumTo safeguard investor interest and ensure that advertisements do not mislead or exploit consumers’ lack of expertise on crypto assets, Indian advertising industry’s self-governing body has come out with guidelines for virtual digital asset advertising. The guidelines have been issued after consulting industry stakeholders, including the government.
The Advertising Standards Council of India (ASCI) noted that even as the government continues to work on the framework for virtual digital assets (VDA), commonly referred to as crypto or non-fungible token (NFT) products, advertising for these products has been very aggressive over the past few months. “ASCI noted that several of these advertisements do not adequately disclose the risks associated with such products," it said in a release.
As per the guidelines, all virtual digital asset-related ads released on or after 1 April must 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." The disclaimer will have to be carried in promotional content in print, video and audio mediums.
In print or static, the disclaimer must be equal to at least 1/5th 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 audio, the disclaimer must be spoken at the end of the advertisement and the voiceover should be at a normal speaking pace and must not be hurried. The guidelines also cover social media posts.
The advertising body has also barred advertisers to use words “currency", “securities", “custodian" and “depositories" in advertisements of VDA products or services as “consumers associate these terms with regulated products".
Also, advertisements that provide information on the cost or profitability of VDA products must contain clear, accurate, sufficient and updated information. “For example, “zero cost" will need to include all costs that the consumer might reasonably associate with the offer or transaction. Information on past performance shall not be provided in any partial or biased manner. Returns for periods of less than 12 months shall not be included," ASCI said.
These guidelines bring advertisements for crypto assets on a par with other financial instruments such as stocks and mutual funds, which have been carrying disclaimers for quite some time.
The regulations come on the heels of the government announcing taxation rules for crypto assets in the Budget.
On 1 February, the government had introduced a flat 1% tax on gains from crypto assets and a 1% tax deducted at source on each crypto transaction.
Shivam Thakral, chief executive officer of BuyUcoin, a homegrown cryptocurrency exchange, said, "We are glad that finally, we have clear advertising guidelines from ASCI for crypto advertising in India. If we look at the existing crypto advertisements, they are already carrying risk-related disclaimers for the investors as mentioned in the latest ASCI guidelines. We feel that the advertising guidelines should be common for asset-based investments with a clear focus on communicating the associated risks to investors."
As per the ASCI guidelines, advertisements for VDA products or exchanges have been barred from showing a minor dealing with crypto products. Further, advertisements cannot show that VDA products or VDA trading could be a solution to money problems, personality problems or other such drawbacks.
Manisha Kapoor, secretary-general, ASCI, said: “We have seen a spate of advertising for virtual digital assets which could compromise consumer interest in the absence of some guardrails. Use of celebrities and high decibel advertising would attract consumers to these offerings, without full disclosure of the risks. Given that this is, as of now, an unregulated space, it is even more important for advertising to be upfront regarding the risks associated with these products."
Further, no advertisement can contain statements that promise or guarantee a future increase in profits. Also, ads for crypto products also cannot be compared to any other asset class which is regulated.
For brand ambassadors, guidelines suggested that since this is a risky category, celebrities or prominent personalities who appear in such advertisements must take special care to ensure that they have done their due diligence about the statements and claims made in the advertisement.
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