The Advertising Standards Council of India (ASCI), the advertising industry’s self-regulatory body, issued guidelines for ads related to crypto products and platforms on February 23.
These guidelines come after crypto platforms last year spent several crores in showcasing ads in front-pages of leading newspapers and in marquee events like the Indian Premier League and T20 World Cup, but had to pause the ad blitz after being rebuked by the Indian government for promising wild profits and for promoting crypto amidst regulatory uncertainty. Following this, ASCI held discussions with the government in December last year to overhaul guidelines around crypto advertising.
In laying out the guidelines, ASCI noted:
“Even as the Indian government continues to work on the framework for virtual digital assets (VDA), commonly referred to as crypto or NFT products, advertising for these products has been very aggressive over the past few months. The Advertising Standards Council of India (ASCI) noted that several of these advertisements do not adequately disclose the risks associated with such products. In order to safeguard consumer interest, and to ensure that ads do not mislead or exploit consumers’ lack of expertise on these products, ASCI has extensively consulted with different stakeholders including government and the virtual digital asset industry – to frame guidelines for virtual digital asset advertising.”
The new guidelines go into effect on April 1, 2022 and all earlier advertisements must not appear in the public domain unless they comply with the guidelines. However, ASCI is a self-regulatory body and its guidelines are not legally binding.
While some countries like Singapore, the UK, and Spain already have guidelines for crypto ads, many are still exploring regulations and India’s guidelines could serve as a model for others.
What are ASCI’s guidelines for crypto ads?
ASCI has decided to refer to crypto products as virtual digital assets (VDA) most likely because the government has chosen this approach while laying out new tax guidelines for crypto.
1. Disclaimer: ASCI stipulates that all ads for VDA products and exchanges must carry the following disclaimer:
“Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.”
Furthermore, the disclaimer must adopt the following measures so that it is “prominent” and “unmissable” by an average consumer:
- Print ads: 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.
- Video ads: In video ads, the disclaimer should be placed at the end of the advertisement against a plain background for a minimum of five seconds. A voiceover speaking at a normal speaking pace must accompany the disclaimer in the text. For videos over two minutes, the said disclaimer should appear at the beginning and at the end of the video.
- Audio ads: In audio ads, the disclaimer must be spoken at the end of the advertisement at a normal speaking pace and must not be hurried. For audio longer than 90 seconds, the said disclaimer should appear at the beginning and at the end of the audio.
- Social media ads: In social media posts, the disclaimer must be carried in the caption and any picture or video attachments. The disclaimer within the caption must be placed at the beginning of the post. Where there are restrictions on text in the static picture, the disclaimer must be carried upfront in the caption.
- Disappearing stories: In disappearing stories or posts unaccompanied by text, the disclaimer will need to be voiced at the end of the story at a normal speaking pace. If the video is 15 seconds or lesser, then the disclaimer may be carried in a prominent and visible manner as an overlay.
- Formats with character limits: In formats where there is a limit on characters, a shortened disclaimer saying “Crypto products and NFTs are unregulated and risky” may be used followed by a link to the full disclaimer.
- Language: The disclaimer must be made in the dominant language of the advertisement
- Other requirements: In addition to the above, all disclaimers must meet the minimum requirements laid down in the ASCI guidelines for disclaimers.
2. Words like “currency” may not be used: The words “currency”, “securities”, “custodian” and “depositories” may not be used in advertisements of VDA products or services as consumers associate these terms with regulated products. The Indian government and the RBI have remained steadfast in noting that cryptocurrencies will never be legal tender and only the RBI-issued Central Bank Digital Currency (CBDC) will be considered legal. At best, it appears that any future regulations will consider crypto products as assets.
3. No contradictory information: ASCI laid out that the information contained in advertisements should not contradict the information or warnings that the regulated entities provide to customers in the marketing of VDA products from time to time.
4. Clear information on costs and profits: Advertisements that provide information on the cost or profitability of VDA products should contain clear, accurate, sufficient, and updated information. As an example, ASCI said that “zero cost” will need to include all costs that the consumer might reasonably associate with the offer or transaction.
5. No biased information on past performance: Information on past performance should not be provided in any partial or biased manner and returns for periods of less than 12 months should not be included.
6. Contact details of advertiser: Advertisements must clearly give out the name of the advertiser and provide an easy way to contact them such as phone number or email. This information should be presented in a manner that is easily understood by the average consumer.
7. No minors directly dealing with the product: The guidelines state that no advertisement for VDA products or exchanges should show a minor, or someone who appears to be a minor, directly dealing with the product, or talking about the product
8. No portrayal of crypto as a solution to money problems: The advertisements should not show crypto products or crypto trading as a solution to money problems, personality problems, or other such drawbacks.
9. No guarantee of profits: No advertisement shall contain statements that promise or guarantee a future increase in profits.
10. No portrayal that crypto is easy to understand: No advertisement should show that understanding VDA products is so easy that consumers do not have to think twice about investing and nothing in the ad should downplay the risks associated with the category.
11. No comparison to regulated products: Crypto products should not be compared to any other asset class which is regulated.
12. Celebrities must do due diligence: Since this is a risky category, celebrities or prominent personalities who appear in crypto advertisements must do their due diligence about the statements and claims made in the advertisement, so as not to mislead consumers.
“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.” – Manisha Kapoor, Secretary General, ASCI
Reaction from the crypto industry
Ashish Singhal, Founder and CEO, CoinSwitch:
“The ASCI guidelines are a step in the right direction to standardize advertisements within the VDA space. The VDA industry is supportive of all efforts towards investor protection, 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.”
Shivam Thakral, CEO, Buyucoin:
“We are glad that finally we have clear advertising guidelines from ASCI for crypto advertising in India. […] The clarity on advertisement guidelines will encourage crypto service providers to create annual media plan which will boost the revenues for advertising industry. The advertising guidelines are based on our current understanding of crypto ecosystem and are expected to evolve as the industry enter a more mature phase.”
Manasa Rajan, Business Head at Jupiter Meta:
“This move is welcome and will offer further legitimacy to this space and create more accountability from the marketers, which is a positive direction for a nascent category with a customer-centric approach. While cryptos are seen as purely investment or trading opportunities, where the ultimate goal is profit, NFTs have a value proposition that is far more versatile than just speculative worth. It is more about changing the way we consume content, engage with art & artists and immerse ourselves in popular culture. So, NFTs’ value cannot be seen from a trader’s lens alone. The experience of involvement, decision making, ownership & utility have emotions attached to it, just like art, gold or even high-end brand purchases. Hence, a regulatory framework should be more inclusive in approach for a nascent category, where the inherent value of these NFTs is still being discovered.”
WazirX told BusinessStandard:
“We anticipate additional regulatory clarity on the Indian crypto landscape and will continue to abide by it.”
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