ASCI whips up crypto hype

These are among the guidelines issued by the Advertising Standards Council of India (ASCI) on Wednesday for all virtual digital assets (VDAs) except currencies.

As of April 1, any advertising of digital assets that is carried on print, TV, audio or digital platforms must carry the following warning: “Crypto products and NFTs are unregulated and can be highly risky. There can be no regulatory recourse for the loss.”

The disclaimer must be prominent and unacceptable. The description includes rules on font size, background, voice overs, captions and use of languages, among other aspects.

ASCI’s new rules aim to prevent companies from making misleading claims about returns from crypto assets to entice investors. The popularity of crypto assets and virtual currencies has also prompted fraudsters to promote fraudulent cryptocurrency schemes.

India’s central bank has repeatedly voiced its concerns over the trading of crypto assets, comparing it to Ponzi schemes and the Dutch tulip bulb market bubble. While the Reserve Bank of India has described the private digital token as having no inherent value and being worthless, it plans to launch a digital rupee in the next financial year to promote financial inclusion.

The guidelines also prohibit the use of the terms “currency”, “securities”, “custodian” and “depository”, as consumers associate these with regulated products.

A virtual digital asset is any information, number, token or code that is not currency and is generated by cryptographic means. They can include NFTs, a kind of unique digital asset, without a tangible form, such as a unique digital work of art. ASCI’s guidelines were issued after detailed consultations with the government as well as the digital asset industry, as the government proposed a 30% tax on profits from trades in cryptocurrencies.

During the last season of the widely watched Indian Premier League cricket tournament in India, the government and advertising regulator caught the attention of cryptocurrency exchanges when they started splurging on advertising.

The advertising regulator said any advertising minor for VDA products or exchanges, or any person who appears to be a minor, is directly dealing with the product or talking about the product. Neither ad may depict VDA products or VDA merchandise as solutions to money problems, “personality problems”, or make statements promising or guaranteeing profits.

Nothing in the advertisement should mitigate the risks associated with the category, the ASCI said. VDA products cannot be compared to any asset class that is regulated.

Keyur Patel, president and co-founder of NFT marketplace GuardianLink, agreed that crypto as an investment class was more volatile than stocks or real estate.

“NFT is not a financial asset, but a digital asset associated with sports, entertainment and arts. Its inherent value is either in art or utility. Therefore, buyers of NFTs do not buy because there is immediate profit but because of their affinity towards celebrities or personalities. Since crypto is purely a trading asset for investment, aggressive education is needed to ensure that returns expectations for buyers are not skewed by hype and unrealistic aspirations,” he said.