Indian crypto exchanges are mulling over a fresh set of dos and don’ts to regulate all forms of ads and communication, according to a report by the Economic Times. One of the don’ts require crypto exchanges to steer clear of the word ‘currency’ in their advertisements as consumers equate it with legal tender, the report added.
The rules will not only apply to advertisements but will also cover sales, literature, television programmes, interviews, public speaking, presentations in seminars and workshops, or any other forum used by crypto companies to market their products.
Some of the don’ts require companies to keep in mind the following:
- Crypto advertisements will desist from comparing crypto with other regulated assets;
- They will not claim that investing in crypto is so easy that they can do it without giving it a second thought;
- Exchanges will not resort to ‘exaggerated or unwarranted claims’ or feature minors in their ads;
- Ads must carry a disclaimer stating that crypto products are unregulated and subject to market risk. The disclaimer will be displayed prominently in print ads; the voiceovers in electronic ads must unfold at a steady pace.
Why this matters: Two Indian crypto exchanges (Coinswitch Kuber and Coin DCX) turned unicorn last year which fuelled a marketing blitzkrieg witnessed in 2021. It turned the heads of regulators who were worried about the impact of the misleading claims made in the ads. A meeting between Prime Minister Modi and crypto industry stakeholders resulted in a cessation of all ad campaigns until a regulatory framework was in place.
ASCI’s attempt to regulate crypto ads
The Advertising Standards Council of India (ASCI) had sought to overhaul guidelines around crypto advertising following discussions with the Union government in December last year.
ASCI’s general secretary Manisha Kapoor had said that the guidelines would cover these issues:
- Adequate disclosure of risk
- Ads misleading consumers over the status of crypto products as legal tender
- Exaggerated claims or unfair comparisons with regulated asset classes
What is ASCI? It is a voluntary self-regulatory organisation for advertising established in 1985. The body comprises members from marketing, creative, media, and allied companies. It drafts a code that advertising content must comply with and oversees its enforcement; however, ASCI’s guidelines are not legally enforceable.
The new guidelines are being discussed with ASCI as well, the ET report revealed.
Government’s concerns around crypto advertising
The Union government was unhappy with crypto ads promising wild profits as revealed in a memo summarising a meeting between Prime Minister Narendra Modi and industry stakeholders. It seemed like crypto exchanges were rushing to sign up new users in an attempt to make it harder for the government to altogether ban cryptocurrencies.
Crypto stakeholders agreed to put a stop to such ads following the meeting. Several cryptocurrency exchanges such as CoinSwitch Kuber, WazirX, and Bitbns paused advertising across platforms. They had earmarked Rs. 100 crore for marketing in 2021 and targeted several marquee events like the Indian Premier League and T20 World Cup which command a reach in millions.
- Facebook eases restrictions on crypto ads, but Indian exchanges unlikely to benefit
- Addressing the taxation and money laundering concerns associated with crypto-assets
- WazirX likely to resume business with Kotak Bank months after private banks shut services to crypto exchanges
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