New rules for Cryptocurrency ads from April 1: Read here

New Delhi, Feb 23: Tracking government's concerns that cryptocurrency advertisements were misleading, advertisers will now have to put a disclaimer while promoting the "highly risky" and unregulated cryptocurrencies from April 1, a self-regulatory body for the industry said on Wednesday.

While the Cryptocurrency and Regulation of Official Digital Currency Bill is still pending, and profits from digital assets transactions will be taxed at 30 per cent, the government wanted to crackdown on cryptocurrency advertisements, which authorities said were mislead the public.

The Advertising Standards Council of India (ASCI) said, all virtual digital assets (VDAs), which are commonly referred to as crypto or non-fungible tokens (NFTs), will have to put the disclaimer in a "prominent and unmissable" way in campaigns for products and services.

The announcement of the guidelines, done after consultations with industry stakeholders, government and financial regulators, comes as the advertising for the controversial products and services is on the upswing.

The government is yet to come out with a law on such assets.

Still, it has proposed a tax on gains made from such transactions, which the crypto players have welcomed as a move to legitimise the industry.

In contrast, the RBI has been firm in calling for a complete ban on such activities, saying they threaten financial stability and the challenge of exchange management, monitoring and regulating such assets.

"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 ASCI chairman Subhash Kamath.

The guidelines say advertisers will have to carry the disclaimer - "crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions" - in a prominent way.

A fifth of the advertising space in print or static ad should be devoted to the disclaimer, while in a video, it should be placed at the end against a plain background with a voice-over reading out the text at average speed, the ASCI said.

The disclaimer must remain on screen for at least 5 seconds in video ads, while for long format ads of over two minutes, it should be placed both at the starting and end of the ad.

Similarly, guidelines on putting the disclaimers also cover audio, social media posts, disappearing stories or posts on social media, it said.

In formats where there is a limit on characters, the following shortened disclaimer must be used "crypto products and NFTs are unregulated and risky", followed by a link to the full disclaimer, it said.

Advertisers have also been barred from using the words "currency", "securities", "custodian", and "depositories" in advertisements of VDA products or services as consumers associate these terms with regulated products.

Information on past performance shall not be provided, partial or biased. The guidelines said that returns for less than 12 months should not be included, adding that minors should not be shown in the ads.

The ASCI has said that no advertisement shall contain statements that promise or guarantee a future increase in profits.

Nothing in the ad should downplay the risks associated with the category, and the VDA products may not be compared to any other regulated asset class.

The ASCI has also asked celebrity endorsers to do due diligence about the statements and claims made in the advertisement not to mislead consumers.

Advertisers and media owners must also ensure that all earlier advertisements must not appear in the public domain unless they comply with the guidelines, post-April 15, it said.

"We have seen a spate of advertising for virtual digital assets which could compromise consumer interest in the absence of some guardrails. Use of celebrities and high decibel advertising would attract consumers to these offerings, without full disclosure of the risks," the body's secretary-general Manisha Kapoor said.

(PTI)