On 23rd February, 2022, the Advertising Standards Council of India (“ASCI”) has issued guidelines for the advertisements of virtual digital assets and services. These guidelines shall be applicable to all advertisements released or published on or after 1st April, 2022. The advertisers shall have to ensure that even the earlier advertisements comply with these regulations post 15th April, 2022. Read the guidelines here.
What is a virtual digital asset?
Virtual Digital Asset (“VDA”) is defined as any information or code or number or token (not being Indian currency or any foreign currency), generated through cryptographic means or otherwise. They are also referred to as ‘crypto products’ or ‘Non-Fungible Tokens’ (“NFTs”).
Need for guidelines
Currently, India leads the list of crypto owners in the world. The Union Budget 2022 has introduced a 30 percent tax on gains from crypto assets and 1 percent TDS on each crypto transaction. However, the Indian laws have not been amended to recognize or regulate the VDAs. The lacuna in law and the lack of awareness on the part of the consumers can have adverse effects on trading related to VDAs. They are an upcoming mode of investment and have garnered extreme popularity among the young generation.
Therefore, the guidelines have been brought in to ensure that the advertisers do not mislead the consumers and these consumers are not exploited due to their lack of knowledge of VDAs. The compliance with the said guidelines is essential so as to not violate Chapter 1 of the ASCI Code. The advertisers have to ensure that the advertisements are truthful, non-ambiguous, non-misleading, non-exaggerating or omitting any essential fact and are not framed in a way that abuses the trust of the consumer.
Overview on the Guidelines
1.Disclaimer – All the advertisements related to VDAs have to essentially display the disclaimer which is prominent and unmissable by an average consumer. The disclaimer has to be in easy-to-read font against a plain background. In a video, the disclaimer must be accompanied by a voice over whose speaking pace should be comprehensible. In social media posts, the disclaimer must be in caption as well as any picture or video attachments. The disclaimer must be in dominant language of the advertisement and must meet the minimum requirements laid down in the ASCI guidelines for disclaimer. 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.”
2. Jargons – The advertisement shall not use works like ‘currency’, ‘securities’, ‘custodian’ and ‘depositories.’
3. Information – The information related to cost, profitability of VDA shall contain clear, accurate, sufficient and updated information. The information related to past performance shall not be provided in a biased manner.
4. Accountable advertiser – The advertisement shall clearly provide the contact details of the advertiser.
5. No Minors – No advertisement may show a minor directly dealing with the product in any manner.
6. No guarantees – No advertisement will show any guarantee that trading in VDAs can improve personality or increase profits.
7. No false assurances – No advertisement shall portray that trading in VDAs is easy and requires no thought or proper knowledge.
8. No comparison – No advertisement shall compare trading in VDAs with trading in other assets.
9. Due diligence by celebrities – The celebrities advertising VDAs shall have to conduct due diligence to ensure that statements and claims made in the advertisement do not mislead the consumers.