homecryptocurrency NewsCrypto, NFT ad high risk disclaimer mandate by ASCI and what the industry thinks
Crypto, NFT ad high-risk disclaimer mandate by ASCI and what the industry thinks
The ASCI said the disclaimer and other guidelines would be applicable to all virtual digital asset ads released or published on or after April 1. The ASCI has also warned celebrities and prominent personalities who appear in VDA advertisements to do "due diligence". The industry has welcomed the guardrails in the crypto ad space. Industry experts say while they wait for more regulatory clarity over the crypto landscape in India, the ASCI move will help educate more people about the emerging investment space.
India's self-regulatory advertising body has made it mandatory for all ads on cryptocurrencies and non-fungible tokens to carry a "prominent and unmissable" disclaimer that says, "crypto products and NFTs are unregulated and can be highly risky".
The Guidelines for Virtual Digital Assets and Linked Services by the Advertising Standards Council of India (ASCI) laid out various dos and don'ts—going into as much details as to where, for how long, when, and in which formats this disclaimer should be placed to make sure people are not misled. It also warned celebrities to ensure they have done their "due diligence" before promoting such products.
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Eliminating misleading ads
Manisha Kapoor, Secretary-General of ASCI, said this was a response to a "spate of such ads compromising consumer interest in the absence of guardrails".
"The 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 important for advertising to be upfront regarding the risks," Kapoor said.
Ajay Dhillon, CBO of NFT community platform Wall.app, also told CNBC-TV18 there have been some misleading campaigns by certain players in the Indian crypto market over the past few months.
"Such ads promise unrealistic returns to the end-users without educating them completely on the risks associated (just like any other financial product)," Dhillon said. "Ethical customer acquisition is very critical while promoting financial products."
He said, currently, the biggest ad platforms globally, like Twitter, do not allow businesses to promote highly volatile financial products like NFTs and cryptocurrencies, but there was no framework around this in India by ASCI to date.
The BACC standards
Arjun Vijay, co-founder and chief operating officer of Giottus Cryptocurrency Exchange, told CNBC-TV18 the guidelines would standardise the communication presented to customers through crypto ads, creating a level platform for all the companies.
"As an industry, we have been self-regulated," Vijay said. "There is a common set of practices and regulations that the members of BACC have created, and we adhere to the same. Being unregulated, we have been aware that the perception of the industry depends on how we conduct ourselves and entities in the space, barring a few, have tried to behave responsibly."
Blockchain and Crypto Assets Council or BACC, a part of the Internet and Mobile Association of India or IAMAI, was in the process of framing guidelines on crypto advertisements.
Explaining crypto is a nascent asset class with inherently higher risk, Vijay said investing in it may be detrimental for some who fail to appreciate the risks involved. "In this context, the ASCI guidelines will help companies and services to communicate with consumers in a common language," he told CNBC-TV18.
The celebrity angle
According to Kshitij Purohit, lead commodities and currencies, CapitalVia Global Research, one of the reasons ASCI came out with the guidelines is because the use of celebrities in advertising crypto/NFT products is bound to attract many investors to the sector.
"So, making it mandatory to provide a strong disclaimer in an unmissable manner will help these investors to choose the product wisely," Purohit told CNBC-TV18.
"The standard disclaimer statement has had such an impact that most people only remember this and nothing else that was promoted or advertised."
No penalties
Purohit underlined that the guidelines do not imply legal recognition or endorsement of the industry or sector, as this is a matter of government policy. "The ASCI only allows for self-regulation of ad content that is permitted by law," he said.
The guidelines do not mention any fines but ask the industry to follow the rules by April 1. The ASCI, however, also gave a grace period of 15 days.
Subhash Kamath, chairman of ASCI, said the organisation held several rounds of discussion with the government, finance sector regulators, and industry stakeholders before framing these guidelines.
'Awaiting regulatory clarity on cryptos'
Nischal Shetty, founder and CEO of WazirX, applauded the ASCI move on regulating crypto and NFT ads and said they would anticipate additional regulatory clarity from the government on the Indian crypto landscape.
"WazirX is motivated by responsible marketing and advertising, and we have been at the forefront of aggressively encouraging our users to understand, educate, and make an informed decision before investing. The entire notion is centred on the idea of teaching people about this burgeoning asset class. As with any asset class investment, investors can put their trust in institutions only after doing their due diligence," Shetty said in a statement.
ACSI dos and don'ts for crypto, NFT ads
Guidelines on high-risk disclaimer
First Published: Feb 23, 2022 5:17 PM IST
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