Advertising industry regulator, Advertising Standards Council of India (ASCI) on Wednesday announced a set of advertising guidelines to be followed by all Virtual Digital Assets (VDAs) and services such as cryptos or NFTs (non-fungible tokens) to protect consumer interest. While ads promoting VDAs must prominently display that they are unregulated, celebrities endorsing them must do their due diligence before appearing in these ads, ASCI said. The guidelines will be applicable to all virtual digital asset-related ads released from 1st April, 2022 across media like print, TV, audio and digital platforms.
ASCI has mandated the following disclaimer to be carried with all VDA advertising: “Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.”
The disclaimer must be made in a manner that it is prominent and unmissable to an average consumer, the regulator said outlining the details on the way this should be incorporated in all ads for VDA products and VDA exchanges. The details include rules on the font size, backgrounds, voiceovers, captions and use of languages, among other things, across ads on different media platforms.
The guidelines also prohibit usage of words such as “currency”, “securities”, “custodian” and “depositories” in advertisements of VDA products or services as consumers associate these terms with regulated products, it added. A VDA is generally any information, a number, token or code that is not a currency and has been generated through cryptographic means.
ASCI’s guidelines were released after elaborate consultations with the government as well as the crypto industry stakeholders following the government proposing a 30% tax on gains made from crypto trades in the Union Budget earlier this month. In a discussion after the Budget, finance minister Nirmala Sitharaman had also clarified that taxing cryptos doesn’t mean it is being legalised.
Crypto exchanges first caught the attention of the government and the ad regulator when they first started splurging on advertising during the last season of the Indian Premier League cricket tournament widely watched in India.
The ad council said that no advertisement for VDA products or exchanges may show a minor, or someone who appears to be a minor, directly dealing with the product, or talking about the product. The ads cannot show that VDA products or VDA trading could be a solution to money problems, personality problems or other such drawbacks or carry statements that promise or guarantee future increase in profits.
Nothing in the ad should downplay the risks associated with the category, ASCI said. Also, VDA products cannot be compared to any other asset class which is regulated.
Importantly, since it’s risky category, celebrities or prominent personalities who appear in VDA advertisements must take special care to ensure that they have done their due diligence about the statements and claims made in the advertisement, so as not to mislead consumers, the guidelines said.
ASCI said that advertisers and media owners must ensure that all earlier advertisements must not appear in the public domain after 15th April unless they comply with the guidelines.
Subhash Kamath, chairman of the council, said they 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."
To be sure, ASCI is a self-regulatory body that ensures transparency, decency and fairness in advertising. The Cable Television Networks (Regulation) Act also requires advertisements to be compliant with ASCI guidelines. However, critics argue that the regulator does not have penal powers to ensure compliance. But ASCI maintains that most of the industry both members and non-members voluntarily comply with the guidelines, keeping consumer interests in mind. “Where there is non compliance, such cases are escalated to sector regulators for further action,” it said.
Keyur Patel, chairman and co-founder of GuardianLink a website that sells blockchain commerce, and co-founder of BeyondLife.club agreed that crypto as an investment class was volatile when compared to stocks or real estate. All investment advertisements and campaigns in this space must be responsible, he said, adding that he supported ASCI’s move.
He said while Crypto is a ‘trading asset’, NFT is more of a ‘utility asset’. "NFT is not a financial asset but a digital one associated with games, entertainment, and art. Its inherent value is either in art or utility. So, the buyers of NFTs doesn’t buy because there are instant gains but for their affinity towards celebrities or personalities. Since crypto is purely a trade asset which is meant for investments, it needs aggressive education to ensure that the expectations of returns for the buyers are not skewed by hype and unrealistic aspirations,” he said.
Manisha Kapoor, secretary general of ASCI added that the use of celebrities and high decibel advertising would attract consumers to these offerings, without full disclosure of the risks. “As of now this is an unregulated space and it is 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.”