What the ASCI’s new guidelines mean for Indian crypto and NFT advertising

ASCI has a new set of crypto advertising guidelines

The Drum dives deep into the recently-announced guidelines on advertising for crypto and NFT categories, and gets some stakeholders of the ecosystem – from brand- and agency-side – to share what they think of the framework and its pros and cons.

Crypto and non-fungible token (NFT) categories in India, like in many markets, have been two of the most buzzing sectors in the last few months, with a large number of brands entering the fray and spending huge amounts of marketing dollars on getting noticed. Globally, this is an emerging technology, and products in the virtual digital asset (VDA) industry have seen significant volatility.

While category advertising has been very aggressive, there has been a lot of ambiguity around the regulatory framework for advertising. As per The Advertising Standards Council of India (ASCI), several of these advertisements do not adequately disclose the risks associated with such products.

To safeguard consumer interest, and to ensure that ads do not mislead or exploit consumers’ lack of expertise on these products, ASCI recently unveiled a set of guidelines for VDA advertising (crypto or NFT products). These guidelines will apply to all advertisements released or published on or after April 1 2022.

The regulatory framework guidelines were launched after extensive consultation with different stakeholders including the government and the VDA industry. Manisha Kapoor, secretary-general, ASCI, says: “Use of celebrities and high decibel advertising would attract consumers to these offerings, without full disclosure of the risks.

“Given that this is, as of now, an unregulated space, it is even more important for advertising to be upfront regarding the risks associated with these products.”

Some of the key guidelines:

  • All ads for VDA products and VDA exchanges, or featuring VDAs, must carry the following disclaimer: “Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.”

  • The words “currency,” “securities,” “custodian” and “depositories” may not be used in advertisements of VDA products or services as consumers associate these terms with regulated products.

  • Advertisements that provide information on the cost or profitability of VDA products shall contain clear, accurate, sufficient and updated information. For example, “zero cost” will need to include all costs that the consumer might reasonably associate with the offer or transaction.

  • Information on past performance shall not be provided in any partial or biased manner. Returns for periods of less than 12 months shall not be included.

  • Every advertisement for VDA products must give out the name of the advertiser and provide an easy way to contact them (phone number or email). This information should be presented in a manner that is easily understood by the average consumer.

  • No advertisement for VDA products or exchanges may show a minor, or someone who appears to be a minor, directly dealing with the product or talking about the product.

  • Celebrities or prominent personalities who appear in VDA advertisements must take special care to ensure that they have done their due diligence about the statements and claims made in the advertisement so as not to mislead consumers.

Will it work and help the consumer?

The key challenge remains around the self-regulatory nature of these guidelines – the guidelines do not amount to any legal recognition or endorsement of the industry or the sector, as that is a matter of government policy. ASCI only provides self-regulation for the content of ads that are permitted by law.

Experts speak

Here is what the stakeholders have to say about the regulatory framework announced for the buzzing category.

Ramalingam Subramanian, head of brand, marketing and communication, CoinDCX

The ASCI guidelines are a step in the right direction to standardize advertisements within the VDA space.

The category ads should ensure transparency and encourage awareness of emerging tech and crypto education for users. Education for crypto is essential through all forms of communication to the masses, which is also why we launched the DCXLearn – a full-fledged crypto learning program with courses on crypto and blockchain to continuously address misinformation and drive public awareness in emerging technologies such as crypto and blockchain.

Sharan Nair, chief business officer, CoinSwitch Kuber

It has become imperative to ensure responsible advertising is done by crypto companies. With the industry gaining traction, there are a lot of new players entering the space with heavy funding, and having a standard guideline on advertising will help in what is being sold to the user.

The ASCI guidelines broadly cover the challenges of the category. Since this is the first version there are bound to be some misses that can be fixed over time. The goal would be to eventually put the guidelines along similar lines as the advertising guidelines for stock and mutual funds.

Abhayanand Singh, chief executive officer, Fantico

While the onus is on NFT marketplaces and crypto exchanges when it comes to advertising VDAs, the ASCI guidelines, in a way, also urge consumers to educate themselves about this new asset class. It is a new technology and a new asset class, and these guidelines work toward giving the industry a shape.

What the industry now seeks is understanding and recognition from the government about VDAs and the benefits the Indian economy can derive through them.

Shrenik Gandhi, co-founder and chief executive officer, White Rivers Media

It is a well-crafted framework that helps set the right expectations and boost up the right narratives to drive the crypto industry’s growth.

We have seen the success of such guidelines being set in BFSI, fantasy sports and other such regulated categories in India. These guidelines are addressing the current problem at hand, i.e. ambiguity and mismatched expectations.

Neena Dasgupta, chief executive officer and director, Zirca Digital Solutions

It is estimated that 20 million Indians jumped onto the crypto bandwagon in 2021, and crypto currencies are rapidly becoming part of investors’ portfolios. Currently Indians are said to hold crypto assets worth $5.3bn.

This is an investment class that is crying out for regulation and oversight from all regulatory stakeholders. Most investors don’t understand this space and there is the potential for them to take unwarranted and uninformed risks. The advertising guidelines were the need of the hour.

Crypto advertising needs specific guidance, considering that this is a new and emerging way of investing. Crypto advertising has been very aggressive and many of these commercials do not adequately disclose the risks. It’s a fast-evolving space, but a start needed to be made. The most important objective is to protect the consumer, and the guidelines are a very good start. ASCI has acted quickly and consulted with all stakeholders, including the crypto industry, to frame the guidelines.

Harikrishnan Pillai, chief executive officer and co-founder, TheSmallBigIdea

From ambiguous to regulated is a big move for the space. The fact it now has regulations around it is tantamount to a certain degree of acceptance and provides a positive roadmap to the future.

One area that needs to be looked into is digital creators who create content around neo-investment opportunities via VDA, but are unlikely to be authorities on the subject. While they might not make any direct revenue from the people trading in VDA, they earn revenue through advertisement on their platform, which runs on such content.

There should be guidelines for such independent creators or channels who have the potential to become pseudo mouthpieces for VDA providers without really falling into the realm of the ASCI guidelines. The guidelines should have a very strong leg that involves platforms that may not be creating content, but are enabling people to spread information.

This of course is a larger narrative where we must start accepting its advertising because digital has various avatars, and slowly and steadily we need to get creators and channels – especially those who monetize digital content – into the ambit of regulations. So the question is should there be regulations only on digital platforms? Why spare the traditional ones?