Here’s How India Will Start Regulating Crypto Related Ads Starting April
by Fintech News Singapore February 28, 2022The Advertising Standards Council of India (ASCI) has released guidelines for the promotion of cryptocurrency and virtual assets related services, prohibiting advertisers to use certain words that may lure consumers into thinking that these services are regulated, and requiring them to include a specific disclaimer that warns of the “highly risky” nature of these assets.
The move comes amid aggressive advertising campaigns observed over the past few months, many of which failed to adequately disclose the risks associated with such products, the ASCI says. This called for the agency to step up to “ensure that ads do not mislead or exploit consumers’ lack of expertise on these products” and “safeguard consumer interest.”
Starting April 01, 2022, all virtual asset-related ads will need to carry a disclaimer that reads: “Crypto products and NFTs [non-fungible tokens] are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.
A shortened version that reads “Crypto products and NFTs are unregulated and risky” may be used for formats where there is a limit on characters, but should be followed by a link to the full disclaimer.
This disclaimer should be made to be prominent and unmissable by the average consumer, the ASCI says. In social media posts, it must be carried in both the caption as well as any picture or video attachment.
In video, it must be placed at the end of the ad against a plain background, and a voiceover must accompany the disclaimer in text. And in long format audio of over 90 seconds, it must be spoken at both the beginning and the end of the ad.
Advertisers are prohibited to use the words “currency”, “securities”, “custodian” and “depositories” since consumers often times associate these terms with regulated products, the ASCI says.
They should also not make it appear like virtual assets will be a solution to money problems, personality problems or other such drawbacks, and no statement that promises or guarantees a future increase in profits should be included.
The guidelines were developed following extensive consultation with different stakeholders including the government and the virtual digital asset industry, the ASCI says, and follows similar moves from regulators in Singapore and Spain.
In Singapore, the central bank is prohibiting crypto trading service providers from promoting their services to the general public, specifically calling out ATMs for providing such access and convenience that “may mislead the public to trade in digital payment tokens (DPTs) on impulse, without considering convenient access may mislead the public to trade in the risks of trading in DPTs.”
In Spain, new regulations started last week, allowing the National Securities Market Commission (CNMV) to specifically monitor advertising for all types of crypto assets and mandating all crypto ads to include warnings about risks involved in such investment.
India’s crypto advertising guidelines were introduced at a time when the government is looking to tighten its grip on the burgeoning yet unregulated sector.
During the presentation of the Union Budget 2022 on February 01, Finance Minister Nirmala Sitharaman made no mention of the upcoming crypto bill but proposed imposing a tax of 30% on virtual assets.
The Finance Minister also shared plans to introduce a Digital Rupee in the fiscal year 2022-23 with hopes for it to “give a big boost to digital economy.” She said the central bank digital currency (CBDC), which will be leveraging blockchain and other technologies, will enable cheaper and more efficient currency management.
RBI governor Shaktikanta Das told local media in January that work on both wholesale and retail models of the CBDC was ongoing.
The CBDC will be a legal tender issued in digital form by the Reserve Bank of India, and will be interchangeable with any other currency. It will be numbered in units, and could potentially enable a more real-time and cost-effective globalization of payment systems, according to the central bank.
