Guidelines issued for advertisements of crypto-related products

The new crypto Ad Rules have arrived and with this the companies dealing in selling crypto assets may turn into crypto liabilities if they don’t follow the rules. Advertising of virtual digital assets and services needs specific guidance, considering that this is a new and as yet an emerging way of investing, since there is a need to make consumers aware of the risks. The Advertising Standards Council of India has introduced a set of 12 guidelines for the advertisement and promotion of virtual digital assets and services such as cryptos and non-fungible assets, almost three months after Prime Minister Narendra Modi slammed “misleading ads” in the cryptocurrency space in November 2021.

The guidelines, applicable on ads of crypto-related products from April 1, 2022, say such ads shouldn't carry the words "currency", "securities", "custodian" and "depositories". Ads should carry a disclaimer saying, "Crypto products & NFTs are unregulated and can be highly risky." Information on past performance shall not be provided in a biased manner and there may be no regulatory recourse for any loss from such transactions. The rule comes while there were commercials for cryptocurrency-related products and offerings, which have flooded TV screens over the past year promising easy money, convenient trading, fixed returns and more.

The council has specified the size of print to be used for the disclosure and the manner in which it should be broadcast through the audio-visual medium. In social media posts, such a disclaimer must be carried in the caption as well as any picture or video attachments. The disclaimer must be made in the dominant language of the advertisement. No advertisement may suggest that virtual digital assets could be a solution to money problems. No advertisement shall contain statements that promise or guarantee future increase in profits.

No advertisement may show that understanding virtual digital asset products is easy or downplay risks. Advertisements that provide information on the cost or profitability of virtual digital products shall contain clear, accurate, sufficient and updated information. These regulations are applicable for Print, Video, Audio ads and also Posts on social media too. The new law also said that advertisements must not contradict the information or warnings that the regulated organisations provide to customers when promoting VDA products on a regular basis.

As a result, cryptocurrency companies will be required to include disclaimers in their ads, much as other industries, like mutual funds, do. The goal is to protect consumer interests and guarantee that advertisements do not mislead or abuse customers’ lack of knowledge about these items.