ASCI issues rules for virtual digital assets

ETtech

Mumbai: Indian advertising industry’s self-governing body has introduced guidelines for promotion and advertising of crypto and nonfungible tokens ( NFTs) on Wednesday amid growing concerns associated with rampant communication targeted at retail investors.

Advertising Standards Council of India (ASCI) said on Wednesday that all virtual digital asset ( VDA) products and services should 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.”

It further stated such disclaimers should be prominent and unmissable to an average consumer. It went on to state specifications for the disclaimer in print, video, audio format as well as social media posts, stories.

Other guidelines issued by ASCI include prohibiting the use of words like currency, securities, custodian, depositories in advertisements. ASCI also said advertisements providing information on the cost or profitability of products should be made clear along with providing accurate and sufficient information, and an easy way for the consumer to contact the advertiser.

The twelve point guideline also states that advertisements should not promise or guarantee profits, and should not compare VDA products with a regulated asset class, or depict minors in the ads.

The guidelines will be applicable to all advertisements published after April 1, 2022.

Subhash Kamath, chairman, 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”.

Also Read |
Experts raise alarm over crypto advertisements

These guidelines come after multiple crypto selling platforms
had to pause large-scale television and print advertisements after encountering criticism from the government and industry stakeholders about the misleading nature of the advertisements.

Crypto platforms, CoinDCX and CoinSwitch Kuber which raised
$90 million and
$260 million in 2021, respectively, have roped in Bollywood stars like Ayushmann Khurrana and Ranveer Singh for ad campaigns during the ICC World Cup. Crypto exchanges have flooded TV screens with advertisements during the ICC T20 World Cup and Indian Premier League. As much as Rs 50 crore was spent during the sports event by crypto platforms,
ET reported on November 16.

Also Read |
Celebs endorsing crypto firms must check claims or face action: ASCI head

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. The 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. 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.

In multiple meetings held last year within the government and between parliamentary standing committee and crypto platforms concerns were aired about the misleading nature of crypto ads that did not have sufficient disclaimers to warn retail investors about the volatile asset class.

In a meeting chaired by Prime Minister Narendra Modi in November 2021, it was decided that attempts made to mislead the youth through overpromising and non-transparent advertising be stopped. That’s when it was decided that the ASCI will formulate a separate set of guidelines to govern virtual digital asset advertising.

ETPrime stories of the day