All ads for crypto products and exchanges must include this disclaimer prominently: “Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.” This disclaimer should apply to all formats of ads across different media, said the Advertisements Standards Council of India or ASCI on Wednesday as they issued guidelines for advertising virtual digital assets (VDAs) like cryptocurrencies and Non-Fungible Tokens (NFTs). 

While the guidelines are similar to those in place for the mutual funds market and share trading, they could curtail crypto startups, which have been advertising more frequently in India, with full page newspaper ads and celebrity endorsements, from positioning their products as ways to make easy money. Mutual fund products, with disclaimers, can be advertised a little more freely as they are tightly regulated and generally less volatile. 

These guidelines were formed in consultation with the crypto industry and the government, the ASCI said in a press release. It’s unclear which companies were consulted; Entrackr has reached out to the council for clarity.

While ASCI guidelines often restrict the kinds of rhetoric an advertiser can employ, they also provide industries with a layer of legitimacy — in the last few months, the council has worked on advertising guidelines for industries like ed-tech and online gambling sites (known as “real money gaming”; most sites concerned don’t fit India’s legal definition of gambling) that have been increasingly under scrutiny by regulators and the government.

Still no legal status

The government recently instituted a 30% tax on crypto earnings in the 2022–23 union budget. Regardless, the government has sought to distance itself from the industry — finance minister Nirmala Sitharaman said on the floor of the Lok Sabha that taxing the industry doesn’t imply that it has been “legalized,” a curious distinction. 

The government has signaled in the past that it is inclined to curtail private cryptocurrencies, viewing these as an economic risk and bristling at their volatility. The Reserve Bank of India’s own “digital rupee,” though, also based on blockchain technology like cryptocurrencies, is not likely to face these hurdles, as it would be backed as legal tender (a status cryptocurrencies pointedly do not have in India). 

While ASCI guidelines often restrict the kinds of rhetoric an advertiser can employ, they also provide industries with a layer of legitimacy — in the last few months, the council has worked on advertising guidelines for industries like ed-tech and online gambling sites (known as “real money gaming”; most sites concerned don’t fit India’s legal definition of gambling) that have been increasingly under scrutiny by regulators and the government.

Beyond requiring a prominent disclaimer, the following norms were put in place (quoted from the ASCI’s guidelines):

• 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 information contained in advertisements shall not contradict the information or warnings that the regulated entities provide to customers in the marketing of VDA products from time to time.
• Advertisements that provide information on the cost or profitability of VDA products shall contain clear, accurate, sufficient and updated information. For example, “zero cost” will need to include all costs that the consumer might reasonably associate with the offer or transaction.
• Information on past performance shall not be provided in any partial or biased manner. Returns for periods of less than 12 months shall not be included.
• Every advertisement for VDA products must clearly give out the name of the advertiser and provide an easy way to contact them (phone number or email). This information should be presented in a manner that is easily understood by the average consumer.
• 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
• No advertisement may show that VDA products or VDA trading could be a solution to money problems, personality problems or other such drawbacks.
• No advertisement shall contain statements that promise or guarantee future increase in profits.
• No advertisement may show that understanding VDA products is so easy that consumers do not have to think twice about investing.  Nothing in the ad should downplay the risks associated with the category.
• VDA products may not be compared to any other asset class which is regulated.
• Since this is a 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.