“Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.” The Advertising Standards Council of India (ASCI) wants this disclaimer prominently displayed on ads and promotions related to virtual digital assets (VDAs) such as cryptos or non-fungible tokens (NFT).
In a set of guidelines issued on Wednesday, ASCI noted that several advertisements for virtual digital assets do not adequately disclose the risks associated with them even as advertising for these products has been very aggressive over the past few months.
The guidelines will be applicable to all VDA-related ads released on or after April 1, 2022. Advertisers and media owners will also have to ensure that post-April 15, all earlier ads do not appear unless they comply with the guidelines.
The disclaimer, which will also cover ads about VDA exchanges, must be carried in a manner that it is “prominent and unmissable by consumers”. For instance:
- In print or static, it should be equal to at least one-fifth of the advertising space at the bottom of the advertisement in an easy-to-read font, against a plain background, and to the maximum font size afforded by the space.
- In video, it should be placed at the end of the advertisement against a plain background. A voiceover, at normal speaking pace, must accompany the disclaimer in text. In long-format videos of over two minutes, it is to be repeated at the beginning and the end of the video. And, it must remain on screen for at least five seconds.
- In audio, it must be spoken at the end of the advertisement at a normal speaking pace.
- In social media posts, it must be carried in both the caption as well as any picture or video attachments.
These will also apply to disappearing stories or posts, says ASCI, adding that the disclaimer must be made in the dominant language of the advertisement.
The guidelines come weeks after the Union Budget when the finance minister introduced a 30 per cent tax on gains from crypto assets and 1 per cent TDS on each crypto transaction. ASCI has clarified that its guidelines should not be read as a legal recognition or endorsement of the industry or sector since that is a matter of government policy.
“The disclaimer will add to knowledge about digital assets and bring transparency to a category that is currently operating largely on FOMO (fear of missing out),” says Amit Nayak, CEO and co-founder of Sahicoin, a young crypto-native social platform that has over 10,000 users so far. “The awareness about the risks will mean that more evolved users will come into the category.
And, there will be a reduction in noise, helping investors to identify the right platforms, products and services.” Nayak adds that it would help if the disclaimer could be simple, clear but also creatively presented. “Eventually, there should be a next set of literature to guide and inform celebrities for endorsing VDAs,” he says.
Adding that “the ASCI guidelines are a step in the right direction to standardise advertisements within the VDA space”, Ashish Singhal, founder and CEO of CoinSwitch, which became India’s second crypto unicorn last year (after CoinDCX), says, “However, 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.”
Welcoming the guidelines, Crypto exchange WazirX says, “We anticipate additional regulatory clarity on the Indian crypto landscape and will continue to abide by it.”
After the crypto taxation move, this is the other positive move that will make investors more confident, adds Nayak.
India already leads with the highest number of crypto owners in the world (100.7 million), according to broker discovery and comparison platform BrokerChooser. The US comes a distant second at 27.4 million, followed by Russia (17.4 million).