In India, virtual digital assets such as crypto and NFTs are on the rise. RNA Technology and IP Attorneys’ Ranjan Narula, Abhishek Nangia, and Daleep Kumar explore the new ASCI criteria governing their advertising.
The Indian government defined virtual digital assets (VDA) for the first time in its annual budget for fiscal year 2022-23, covering both cryptocurrencies and non-fungible tokens (NFTs).
The government also enacted a specific provision to tax profits on VDA trading at 30%. The basis for this tax was the meteoric growth in the number and quantity of cryptocurrency transactions.
Many crypto platforms have developed in recent years that promise ‘guaranteed profits’ and employ phrases often associated with actual assets to establish confidence among investors. A noisy campaign promising ‘instant riches’ is luring investors to these digital assets. Despite market swings and an unknown legal status, millennials are especially drawn to cryptocurrency trading.
As crypto and NFTs gained pace in India, it became vital to safeguard consumers by regulating advertising that may lead them astray and persuade them to invest in these risky products.
With this in mind, the Advertising Standards Council of India (ASCI) – India’s advertising watchdog – conducted stakeholder consultations before issuing rules on advertising and promoting VDA and associated services. The following are the important points of these guidelines:
All advertisements for VDA goods and VDA exchanges, as well as those showing VDAs, must include the following disclaimer: “Crypto products and NFTs are unregulated and may be very hazardous.” There may be no regulatory remedy for any losses incurred as a result of such transactions.” The ASCI has also specified how such a disclaimer must be made for various types of advertisements (including print or static, video, audio, social media posts, disappearing stories or posts without accompanying text, and formats with character limits) so that it is prominent and unmissable by the average consumer.
- The phrases ‘currency,”securities,’ ‘custodian,’ and ‘deposits’ may not be used in VDA product or service marketing since consumers identify these terms with regulated goods.
- Advertisements must not contradict the information or cautions that regulated companies offer to clients in the marketing of VDA products on a regular basis.
- Advertisements including information on the cost or profitability of VDA goods must be clear, precise, adequate, and up to date. For example, the term “zero cost” must include any charges that the customer can properly connect with the offer or transaction.
- Past performance information should not be supplied in a partial or biased way, and returns for periods shorter than 12 months shall be excluded.
- Every advertising for VDA goods must clearly include the advertiser’s name and offer a simple means to contact them (phone number or email).
- No advertising for VDA goods or exchanges may depict a minor, or anybody who looks to be a minor, directly interacting with or discussing the product.
- No marketing may suggest that VDA goods or VDA trading are a solution to financial, personality, or other concerns.
- No advertising must include assertions that promise or guarantee a rise in earnings in the future.
- No marketing can claim that comprehending VDA goods is so simple that customers would not hesitate to spend. Nothing in the commercial should minimize the dangers of the category.
- VDA products may not be compared to any other regulated asset class.
Because this is a risky category, celebrities or prominent personalities who appear in VDA advertisements must take extra precautions to ensure that they have done their due diligence on the statements and claims made in the advertisement so that consumers are not misled.
These regulations will apply to any VDA-related advertisements produced on or after April 1, 2022. To maintain their ongoing validity in the public domain, all previous commercials must likewise conform with the criteria by April 15, 2022.
Guidelines for Greetings
While VDAs do not have legal status in India, there is a tremendous surge in VDA ads showcasing celebrities and important persons on various print and digital media.
These principles are anticipated to offer clarity, restore customer trust, and strengthen the responsibility of those who supply VDA services.
It’s intriguing that the government wants to tax gains from VDA trading (at a rate of 30%) while claiming that they are uncontrolled assets.