The crypto industry has welcomed the new set of guidelines released by the Advertising Standards Council of India (ASCI) for advertising virtual digital assets on February 23. Late last year, the industry had faced flak from the government and was criticised for misleading advertisements across print medium, television and social networks.
"There are nuances that need to be addressed as the space is ever-evolving. We will continue to work together with ASCI and other stakeholders to refine them further," said Ashish Singhal, Founder, and CEO, CoinSwitch.
Earlier today, self-regulatory body ASCI mandated that all advertisements for virtual digital assets must carry a prominent disclaimer stating, "Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions."
The 12-point guidelines require the disclaimer to be clearly read out for video ads and prohibit usage of words like ‘currency’, ‘securities’, ‘custodian’ and ‘depositories’. The advertisements are barred from showing minors dealing with virtual digital assets.
Additionally, ads should not show virtual digital assets as a solution to money or personality problems or other drawbacks and should not promise or guarantee an increase in profits in the future.
“We applaud the ASCI Guidelines because we genuinely think that the goal of this sector is foster innovation while protecting their interests. The entire notion is centred on the idea of teaching people about this burgeoning asset class. As with any asset class investment, investors can put their trust in institutions only after doing their due diligence,” said Nischal Shetty, founder of crypto exchange platform WazirX.
“Furthermore, we anticipate additional regulatory clarity on the Indian crypto landscape and will continue to abide by it,” added Shetty.
ASCI has said that these guidelines will be effective from April 1, 2022 and after April 15, all the earlier advertisements must be removed from public domain unless they comply with the guidelines.
Meanwhile, the cryptocurrency industry continues to face uncertainty as the details of the impending cryptocurrency Bill are still not known and the government has proposed a 30 percent fine on gains from such virtual digital assets from the next fiscal year.
“These guidelines were quite needed. If you do not understand the risk and start trading, you will burn your hands,” said Anshu Agrawal, cofounder of Flint. “These guidelines will bring in the right set of people who will help the ecosystem grow and moreover this will help in building the trust on the industry which is bound to help in the long-run.”
According to lawyer Shreya Suri, who is the tech and advisory Partner at IndusLaw, the idea behind these guidelines are on the lines of the disclaimers given for insurance and mutual fund advertisements in a bid to safeguard investors and their savings.
“Why they want to highlight the fact that virtual digital assets are unregulated is there is no legal recourse available at the moment. So, anyone investing should be aware that they are doing it literally at their own risk. These guidelines are trying to bring clarity to a legal position, or rather the lack of legal position, which already exists as of today,” Suri said.
The industry’s view is also that the guidelines will not bring in a major change in the current momentum as these practices and disclaimers were already being followed.
Sathvik Vishwanath, CEO and Co-founder at Unocoin said, "I don't think this will have any major impact because these disclaimers are already used in our terms and conditions, advertisements, blog posts and have been doing this since a while. Now it will just become more uniform."
The bright side is that these guidelines are expected to bring more credibility for virtual digital assets, shedding the image of dodgy ads, according to IndusLaw’s Suri. But she does see a slight impact on investor sentiment.“The guidelines can disincentivise a certain set of investors. Some were already aware of what these assets are. But those who were investing without enough knowledge may now be deterred,” said Suri.