A timely reminder to the investors of the risks involved in trading cryptos
In a bid to warn the investors of the illegal cryptocurrency, the Advertising Standards Council of India (ASCI) come out with a new direction. Advertisers will have to prominently carry a disclaimer for crypto products and non-fungible tokens mentioning that these products are “unregulated and can be highly risky“, according to the new guideline of ASCI. Besides, the self-regulatory has said that such advertisements should mention that there may be no regulatory recourse for any loss from such transactions.
All media houses and not yet approved cryptocurrency companies have to abide by ASCI’s new guidelines. All Virtual Digital Assets (VDAs), which are commonly referred to as crypto or Non-Fungible Tokens (NFTs), will have to put the disclaimer in a “prominent and unmissable” way in campaigns for products and services. The announcement of the guidelines, done after consultations with industry stakeholders, government, and financial regulators as well, comes as the advertising for the controversial products and services is on the upswing.
The Government of India is yet to come out with a law on such assets but has proposed a tax on gains made from such transactions which have been welcomed by the crypto players as a move to legitimize the industry, while the RBI has been firm in calling for a complete ban on such activities saying they are a threat to financial stability.
“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,” ASCI chairman Subhash Kamath said. The guidelines say advertisers will have to 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” — in a prominent way.
A fifth of the advertising space in print or static advertisement should be devoted to the disclaimer, while in a video, it should be placed at the end against a plain background with a voice-over reading out the text at normal speed, the ASCI said. The disclaimer must remain on screen for at least five seconds in video ads, while for long format ads of over two minutes it should be placed both at the starting and end of the advertisement.
Similarly, guidelines on putting the disclaimers also cover audio, social media posts, disappearing stories, or posts on social media, it said. In formats where there is a limit on characters, the following shortened disclaimer must be used “crypto products and NFTs are unregulated and risky” followed by a link to the full disclaimer, it said.
Advertisers have also been barred from using the words “currency”, “securities”, “custodian” and “depositories” in advertisements of VDA products or services as consumers associate these terms with regulated products. 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, the guidelines said, adding that minors should not be shown in the ads.
No advertisement shall contain statements that promise or guarantee a future increase in profits, the ASCI has said. Nothing in the ad should downplay the risks associated with the category, and the VDA products may not be compared to any other asset class which is regulated. The ASCI has also asked celebrity endorsers to do due diligence about the statements and claims made in the advertisement, so as not to mislead consumers.
Advertisers and media owners must also ensure that all earlier advertisements must not appear in the public domain unless they comply with the guidelines, it 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,” the body’s secretary-general Manisha Kapoor said.
On February 10, RBI Governor Shaktikanta Das said cryptocurrencies were a “threat to macroeconomic and financial stability”.
[with PTI inputs]
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