SEBI proposes banning celebrity endorsement of cryptos
- SEBI has suggested that no prominent public figures should endorse cryptos
- Companies promoting cryptos should put up disclosures listing possible law violations
- ASCI issued crypto advertising guidelines in February
The Securities & Exchange Board of India (SEBI) has suggested that no 'prominent public figures, including celebrities and sportsmen,' should endorse crypto products. The market regulator proposed that companies promoting cryptos and digital assets should also put up disclosures listing possible law violations.
In April, SEBI clarified its position on the matter with India’s Parliamentary Standing Committee on Finance when members asked questions on various aspects of crypto. As a result, the market regulator submitted a detailed written response to the Parliamentary Panel.
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The Advertising Standards Council of India (ASCI) issued crypto advertising guidelines in February and the Ministry of Finance had urged the SEBI to share its stance on such ads.
In response, the SEBI reportedly said, "Given that crypto products are unregulated, prominent public figures including celebrities, sportsmen, etc. or their voice shall not be used for endorsement/advertisement of crypto products".
The market regulator also said that prominent public figures should be held responsible for making such endorsements which is a possible violation of the Consumer Protection Act or any other law.
According to the ASCI guidelines, all ads should carry a disclaimer saying, "Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions". Such a disclaimer should be made in the following manner so that it is prominent and unmissable by an average consumer, said the advertising watchdog.
SEBI recommended that the given disclaimer by the ASCI must include the possible law violations in crypto transactions. "Dealings in crypto products may lead to prosecution for possible violation of Indian laws such as FEMA, BUDS Act, PMLA, etc”.
Considering the volatile nature of cryptos and consumer interest, SEBI’s proposal may not be completely unwarranted.
Over the past few weeks, the crypto market has seen a sharp decline. There is unrest in the market because of TerraUSD’s Luna’s crash from $116 on April 5 to $0 on May 13, a 100% decline in its value. Bitcoin, the world’s biggest cryptocurrency, has slipped 35.75% YTD and currently trading around Rs 22 lakh. It has lost more than half of its value since it reached an all-time high of $69,000 in November last year.
Crypto is yet to be regulated and has been declared virtual digital assets (VDA) for taxation purposes only. Since VDAs are a risky category, SEBI wants prominent personalities with a huge following to take special precautions and proper research about the statement and claims made in the advertisement to protect the consumers’ interest.