These new advertising guidelines have been introduced at an opportune time when market has started to evolve with huge interest from retail investors.
The financial market universe in today’s times provides investors with countless investment opportunities. New financial instruments are being developed periodically and one such new instrument that has gained popularity is cryptocurrency. The crypto market in India has experienced more than 500% growth in the past 24 months.
A large part of this growth has been fuelled by sponsorships and advertising campaigns by Crypto Service Providers, e.g., Crypto exchanges and apps. These ads were not subject to advertising regulations in the same manner as other financial products and services in India. Hence, crypto-related ads do not fully disclose the risks associated with digital asset investments. This raises concerns over the “irresponsible” promotion of cryptocurrencies by crypto exchanges, celebrities and social media influencers.
What do the guidelines cover?
Effective from April 1, 2022; the Advertising Standards Council of India (ASCI) has introduced a set of 12 guidelines for the advertisement and promotion of virtual digital assets (VDAs) and services such as cryptos and non-fungible assets (NFTs). Here is what the guidelines say:
- All advertisements of crypto products, exchanges or virtual digital assets will 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.”
- The disclaimer should be made 'prominent' and 'unmissable' by an average consumer
- The disclaimer has to be in the language of the advertisement.
- Words like “currency”, “securities”, “custodian” and “depositories” cannot be used in ads
- The ad cannot say "Crypto is legal"
- Ads need to be truthful about the costs or profits incurred by consumers.
- "Zero Cost" should be absolutely Zero, with no hidden charges.
- Past performance information can only be used with 12 months of information
- Should be non-biased
- Email/contact numbers needed on ad for customers to contact.
- The ads must not show any minors.
- Ads should not show trading crypto is a solution to the money problem.
- Should not give any guarantee of returns.
- Ads cannot show that understanding VDA products is so easy
- The ad should not downplay the risks
Guidelines for various ad types
For Print Ads: ASCI has clarified the space and font size in the case of printed ads. The disclaimer needs to be equal to at least one-fifth of the advertising space at the bottom of the advertisement in an easy-to-read font, against a plain background, and in the maximum font size that the space can accommodate.
For Video Ads: Disclaimer should be placed at the end of the video against a plain background with a voice-over. The voiceover has to be at a normal speaking pace and must not be hurried. The disclaimer should remain on screen for at least 5 seconds. If the video is longer than 2 min, the disclaimer should be placed at the beginning as well.
For Audio Ads: Disclaimer must be spoken at the end of the ad. If the ad is longer than 90 seconds, the disclaimer must be spoken in the beginning as well as the end.
For Social Ads: Disclaimer must be carried as a caption as well as any picture or video attachments. The disclaimer within the caption must be placed upfront at the beginning of the post.
For Disappearing posts (these include stories and reels): For stories or posts unaccompanied by text, the disclaimer needs to be voiced at the end of the story in the manner specified for other formats. If the video duration is 15 seconds or less, then the disclaimer may be carried in a prominent manner as an overlay. For word and time constraints the disclaimer can say "Crypto products and NFTs are unregulated and risky"
For celebrities: Celebrities or prominent personalities appearing in VDA advertisements must take special care and need to ensure that they have done due diligence on statements and claims.
Expert opinion
These new advertising guidelines have been introduced at an opportune time when the market has started to evolve and there is a huge interest from many retail investors. Being an unregulated space, it is imperative that “responsibility” be driven by the advertisers with an upfront declaration of the risks associated with these products. We believe that, while the legal clarity is missing from the public discourse, these measures will act as guiding points for all investors to “look before they leap”.
There are countries like the UK, Spain and Singapore that have already acted upon crypto ads and there have been substantial improvements in how people handle them. India being a significantly large market for this emerging technology and products, we believe that this clarity on advertisements will encourage existing crypto service providers and new players as well to create more responsible and expressive media plans.
READ | DNA Money Guide: Financial planning in 2022 for the cautious professional
The authors and Founder & CEO and Co-Founder & COO of EasyFi Network.
(Disclaimer: The views expressed above are the author's own and do not reflect those of DNA.)
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