Crypto ads in India will need come with a ‘high risk’ disclaimer from April 1

• The Advertising Standards Council of India (ASCI) has set new guidelines for crypto ads in the country.
• Cryptocurrency exchanges had been advertising widely since the Indian Premier League cricketing event last year.
• Politicians, experts and even the country’s central bank have noted several issues with these ads.

The Advertising Standards Council of India (ASCI), a self regulatory industry body that sets standards for advertising in India, has announced new regulations for ads related to crypto in the country, effective from April.

Under the new standards, crypto exchanges and other firms running ads around ‘virtual digital assets’ will have to carry a disclaimer warning viewers that these assets can be “highly risky”.

Cryptos are high risk investments

The ASCI noted that advertising of crypto products has been “very aggressive” in the past few months, and that several of these advertisements “do not adequately disclose the risks” associated with investing in cryptocurrencies.

This is an issue that politicians, experts and even officials from the country’s central bank, the Reserve Bank of India (RBI), have raised in the past.

“They [cryptocurrencies] will undermine RBI’s ability to deal with issues related to financial stability. I think it is my duty to tell investors that when they are investing in cryptocurrencies, they should keep in mind that they are investing at their own risk,” RBI Governor, Shaktikanta Das, said on February 11.

“They should keep in mind that these cryptocurrencies have no underlying value,” he added, while likening the frenzy around cryptos to the Tulip Mania of the 17th century.

Crypto ads had also been brought in question in a Parliamentary Committee hearing in January this year. Crypto exchanges, including WazirX, CoinDCX and CoinSwitch Kuber, had withdrawn their advertisements from TV last year, after experts pointed out that they are aiding the frenzy around crypto without informing users of the risks associated with such investments.

What are ASCI’s new guidelines?

As part of the ASCI’s guidelines, print ads about crypto will need to give the disclaimer at least one fifth of the advertising space at the bottom of the ad in an easy to read font and against a plain background. On videos, the disclaimer has to be placed at the end of the ad and against plain backgrounds. The voice over must accompany the disclaimer text as well, similar to ads about mutual funds and insurance schemes.

Further, the guidelines also include advertisements through Instagram stories, audio, social media posts and more. For social media posts, the disclaimer must be carried in both captions and the pictures or videos in the posts, with captions carrying the disclaimer upfront in the beginning of the post. For Stories, the disclaimer has to be “voiced” at the end of the story, and short videos of 15 seconds of less have to display the disclaimer in a prominent manner too.

Lastly, the disclaimer will be shortened to “crypto products and NFTs are unregulated and risky” along with a link to the full disclaimer if the advertising medium has a limit on characters. The disclaimer should also be placed in the “dominant language” of the advertisement in question.

India’s new crypto ad regulations are about more than just putting up a disclaimer

Other than the disclaimer, the ASCI is also barring the use of the words currency, securities, custodian and depositories’ in crypto related ads.

The information in these ads must not contradict the disclaimer either, and must provide information on the cost and profitability of virtual digital asset products. This means that companies can’t simply advertise ‘zero cost’ investments without disclosing other costs that the “consumer might reasonable associate” with such transactions. Information on past performance has to be provided in an unbiased and complete manner.

The new guidelines will come into effect from April 1 this year, and advertisers and media owners will have to ensure that all earlier ads also comply with the standards by April 15.

The ASCI’s guidelines come less than a month after Finance Minister Nirmala Sitharaman announced plans to tax cryptocurrency investments at India’s Union Budget this year.

"We had several rounds of discussion with the government, finance sector regulators, and industry stakeholders before framing these guidelines. Advertising of virtual digital assets and services needs specific guidance, considering that this is a new and as yet an emerging way of investing. Hence, there is a need to make consumers aware of the risks and ask them to proceed with caution," said Subhash Kamath, Chairman of ASCI.

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