The massive growth in the cryptocurrency market in India has led to a steep rise of advertisements in cryptocurrency exchanges. With the aim to prevent misleading advertisements and present the end consumer with relevant disclaimers and disclosures prior to investing the Advertising Standards Council of India (“ASCI”) on February 23, 2022, released its ‘Guidelines for advertising of Virtual Digital Assets and linked services’ with the objective of ensuring that advertisements do not exploit a consumer's lack of expertise or awareness on virtual digital assets (“VDA”) like cryptocurrency and non-fungible tokens.
The Guidelines require all advertisements for VDA products, VDA exchange and featuring VDA to 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” in a prominent and unmissable manner in the spirit of consumer welfare and interest.
- For print or static: The disclaimer must be equal to at least 1/5th 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.
- For video: A disclaimer will have to be placed at the end of the advertisement against a plain background. A voiceover must accompany the disclaimer in text at a normal speaking pace. For long format videos (over two minutes), the disclaimer should be repeated at the beginning and at the end of the video and must remain on screen for a minimum of five seconds.
- For audio: The disclaimer must be spoken at the end of the advertisement at a normal speaking pace. In the case of long format audio of over 90 seconds, the said disclaimer should be repeated at the beginning and at the end of the audio.
- For social media posts: The disclaimer must be carried in both - the caption as well as any picture or video attachments. The disclaimer within the caption must be placed upfront at the beginning of the post.
- For disappearing stories or posts unaccompanied by text: The disclaimer will need to be voiced at the end of the story. For video duration of 15 seconds or lesser, then the disclaimer may be carried as an overlay in a prominent and visible manner.
- For advertising formats with limited characters, a shortened disclaimer may be used "Crypto products and NFTs are unregulated and risky" followed by a link to the full disclaimer.
The Guidelines seem to strike a balance between safeguarding consumer interest while accommodating the creativity of an advertiser in exercising and implementing the advertising format of their preference.
The following format related instructions have been issued:
A few of the key general mandates in the Guidelines are specified below;
- The disclaimer must be made in the dominant language of the advertisement and must meet the minimum requirements laid down in the ASCI guidelines for disclaimers.
- Words such as "currency", "securities", "custodian" and "depositories" may not be used in advertisements of VDA products or services as these are often associated with regulated products.
- Advertisements that provide information on the cost or profitability of VDA products shall contain clear, accurate, sufficient, and updated information.
- Information on past performance shall not be provided in any partial or biased manner.
- Advertisements for VDA products must clearly give out the name of the advertiser and provide a way to contact them (phone number or email).
- No VDA advertisements may show a minor, or someone who appears to be a minor directly dealing with the product.
- No advertisement shall contain statements that promise or guarantee future increase in profits.
- VDA products may not be compared to any other asset class which is regulated.
- Celebrities are required to do their due diligence owing to the risky nature of the category.
Since this space is currently unregulated in India, this self-regulatory mechanism brings in much needed awareness to consumers by educating them with complete facts and potential risks. Also, standardisation of advertising norms for VDA’s also projects India as a serious player in the crypto market.
The Guidelines will be applicable to all advertisements published on or after April 1, 2022. Advertisements released or published earlier are also required to comply with the Guidelines to remain on air after April 15, 2022.