Over a month after the government classified cryptocurrencies and non-fungible tokens (NFT) as 'virtual digital assets', the Advertising Standards Council of India (ASCI) has released a set of guidelines for advertising these products.
ASCI, which is a self-regulatory organisation for the advertising industry, has mandated that all advertisements for virtual digital assets must carry a 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."
These disclaimers are required to be made in a manner that they are prominently visible to the average consumer. ASCI said in a statement that these guidelines have been formed after extensive consultation with stakeholders including the government and the industry.
"Advertising for these products has been very aggressive over the past few months. The Advertising Standards Council of India (ASCI) noted that several of these advertisements do not adequately disclose the risks associated with such products," the statement said.
Subhash Kamath, Chairman of ASCI said, "We had several rounds of discussion with the government, finance sector regulators, and industry stakeholders before framing these guidelines. 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."
The guidelines will be applicable to all advertisements released or published on or after April 1, 2022. The guidelines also mandate that post April 15, 2022 all earlier advertisements must not appear in the public domain unless they comply with the guidelines.
The 12-point guidelines require the disclaimer to be clearly read out for video ads and prohibits 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 problems or other drawbacks and should not promise or guarantee future increase in profits.
“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,” said Manisha Kapoor, Secretary General of ASCI.
The guidelines also require celebrities to ensure that they have done enough due diligence about the claims made in the advertisements they appear in.
“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. Globally, this is an emerging technology and products in the virtual digital asset industry have seen significant volatility. We believe with these guidelines, advertisements would be fairer and more transparent,” Kapoor added.
In November last year, Prime Minister Narendra Modi had chaired a meeting on cryptocurrency with stakeholders in which concerns around non-transparent crypto advertising were raised. The government strongly felt that any over-promising or misleading advertisements must be stopped.
However, the same month saw an uptick in crypto ads driven by the festive season and cricket matches, according to data by AdEx India, a division of TAM Media Research.
In the print medium, the cryptocurrency category ad space widened to 60 percent in November 2021 from 0.02 percent in July 2021. Zeb It Service, which operates the Zebpay cryptocurrency brand, and Bitcipher Labs, the owner of Coinswitch Kuber platform, were the top two advertisers in print, accounting for more than 85 percent share of ad space in the July-November period, Moneycontrol had reported.
Additionally, dodgy ads continued across social media through influencer-based partnerships, besides unchecked content on YouTube and Telegram.
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