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Ananya Upadhya | National Law U. Delhi, IN
The Advertising Standards Council of India (ASCI) issued a set of guidelines Wednesday designed to prevent risk to users of crypto assets and related services.
Titled the “Guidelines for Advertising of Virtual Digital Assets and Linked Services,” the guidelines prefer the term “Virtual Digital Assets” (VDAs) over crypto assets. They define a VDA as any information, code, or token, generated through cryptography or other means, which acts as a representation or store of value or a unit of account, thus encompassing cryptocurrencies and related products such as non-fungible tokens (NFTs).
The guidelines are intended to protect consumers and investors from risks arising from the VDA market. VDAs, the document states, are incredibly volatile since they are neither regulated nor backed by tangible assets. The guidelines seek to align VDA advertisements with the ASCI Code, which requires advertisements to be truthful, not misleading by “ambiguity, exaggeration or omission,” and not exploitative of consumers’ trust or lack of awareness. Compliance with the ASCI Code as required by the Cable Television Network Rules, 1994, and several other entities regulating different products.
Most importantly, the guidelines require a disclaimer to prominently accompany all advertisements for VDAs and VDA exchanges. The disclaimer must equal at least 20 percent of the total advertising space in print or static and at least five seconds in video. It must also feature in audio and social media advertisements. The disclaimer reads, “Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.”
The guidelines ban VDA advertisers from likening VDAs to regulated assets or using terms with connotations of being regulated, such as “currency” and “securities.” Advertisers are also prevented from contradicting warnings against crypto assets issued by financial regulators, underplaying risks, or positioning crypto assets as a guaranteed source of profits or a solution to financial troubles. Minors are prohibited from “directly dealing with” or talking about crypto assets in advertisements.
Advertisements must contain clear and updated information about all costs involved in VDA transactions. If the information on past returns is included, it must be complete and not for less than 12 months. The name and contact details of the advertiser must also be provided.
The guidelines, which follow the unveiling of the new tax regime on cryptocurrencies, apply to all new advertisements from April 1. By April 15, advertisers must also modify older advertisements to comply with the guidelines.
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(With input from news agency language)
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