Delhi High Court issues guidelines for “standardized disclaimers” on crypto advertisements in India
The Delhi High Court today issued a notice in a plea seeking guidelines to regulate the advertisement of cryptocurrency exchanges in India.
Delhi High Court seeking guidelines to regulate advertisement of cryptocurrency exchanges on TV
Delhi High Court has issued a notice on the plea filed against cryptocurrency advertisements in India. The court has asked concerned regulatory bodies to take note of the matter and issue guidelines for standardized disclaimers on the ads in the public interest.
The Divisional Bench of Justice DN Patel and Justice Jyoti Singh notified the Securities and Exchange Board of India (SEBI), the Ministry of Information and Broadcasting, directing them of compulsory guidelines for all crypto advertisements broadcasted in India.
This includes the following elements:
- Standardized Font Size of Disclaimers
- Voice-Over and other aspects
First, any advertisement of cryptocurrency has disclaimers. The plea claims that crypto assets’ are volatile in nature, and pose an increased likelihood of risky traditional outcomes upon investment, compared to investments. However, the current disclaimers on advertisements of these risky digital assets are too small to read and need to be broadcasted in a standard size.
Therefore, the standard size disclaimer shall read: “Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risk.”
Along with the inclusion of standard size the plea has also requested a voice-over of the disclaimers in case the ad is cut too short in duration and people are unable to read the full text as quickly. Full disclosure system shall be followed with cryptocurrency ads, same as mutual funds.
Advertising about cryptocurrency on TV or Youtube can influence the behavior of investors. Moreover, it is possible to suffer great damage as a result of doing so. Investors may end up suing crypto firms for not warning them.
Therefore, if advertising, must comply with the new requirements and having a disclaimer on screen after the end of the advertisement with voice over in English and Hindi and correct placing and at least 80% coverage in terms of the size on the screen to be viewable and readable by the investor.
India reportedly prohibits the ownership of private digital assets in the country
According to PRS Legislative Research, a non-profit organization that tracks the activities of the Indian Parliament, the proposed Cryptocurrency and Regulation of Official Digital Currency Bill is listed for introduction, consideration, and passing. The bill may be presented during the Parliament’s Monsoon Session, which kicks off on July 19th.
Reportedly, the proposal is aimed at facilitating the creation of India’s central bank digital currency (CBDC) and banning private cryptocurrency ownership in the country. However, it does provide exceptions to coins that promote the underlying technology of the cryptocurrency and its use.
A similar crackdown on crypto advertising has been started in London. British watchdog, the Advertising Agency Standards (ASA) announced a nationwide campaign to crack down on misleading crypto advertising on July 9. Cryptocurrency ads are a red flag as they pose a potential threat to a less aware and vulnerable audience of financial promotions.
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