Celebrities must do their due diligence before endorsing cryptocurrency companies as they could be held accountable for misleading claims, Subhash Kamath, chairman of the Advertising Standards Council of India told ET.
This comes amid an ad blitz by crypto companies such as CoinSwitch Kuber, CoinDCX and others during the ongoing T20 World Cup. The ads, especially those that aired during the India-Pakistan match on Sunday, sparked heated debates online about some of their claims, and whether they came with adequate disclaimers.
“Cryptocurrency is a very new concept and not everyone understands it fully yet. Celebrities really need to do their due diligence when backing a claim. Because if it’s found misleading, they can be held accountable for it,” Kamath told ET, referring to the Consumer Protection Act, 2019, which came into effect last year. The new makes it the duty of a person advertising a product or service to ensure that their claims are not false or misleading.
Crypto platforms flush with risk capital have been roping in top celebrities like Ranveer Singh and Ayushmann Khurrana to advertise crypto trading in India. There are currently around 15-20 million crypto investors in the country.
“Celebrities command a huge amount of faith and trust from their followers and fans. Financial instruments and investments are something celebrities should be careful about endorsing,” Kamath said.
Mathew Chacko, partner at Spice Route Legal, said, “Celebrities and social media influencers are well-advised to be cautious when endorsing crypto products. We have multiple examples of celebrities being pulled up outside India. While the law is not that clear, nothing stops a court from filling in the gaps and holding a celebrity liable for some of the ridiculous endorsements that are flying around.”
Ramalingam Subramanian, head of brand, marketing and communications at CoinDCX, said the company had put out adequate disclaimers in print and TV ads, which were comparable to those in mutual funds ads.
“There are a lot of misconceptions out there. I don’t mind people questioning whether crypto is safe or not. But the dialogue should happen,” he said. The crypto industry itself has asked the authorities for regulations on several occasions, he added.
One advertisement that sparked anger on social media was by crypto exchange Bitbns, which offers a variety of crypto investment products that it calls “fixed deposits”. In the advertisement, which was aired during the India-Pakistan match, the company promised four times the returns of a traditional fixed deposit.
Gaurav Dahake, CEO of Bitbns, justified this by saying that investors were getting returns in “the same form factor” as their deposits, so the 4x claim is not misleading. However, he admitted that the underlying volatility in cryptocurrencies was not factored into the claim of 4x returns. Dahake said that the company is spending about Rs 8 crore on ads during the T20 World Cup.
Crypto remains self-regulated
In July, two advocates filed a public interest litigation against crypto exchanges WazirX, Coinswitch Kuber and CoinDCX, asking the court to direct India’s capital markets regulator to issue guidelines and take steps against advertisements on TV that run without standard disclaimers. The case will be heard next on December 3, exchanges told ET.
Following the PIL, ASCI and the Blockchain and Crypto Assets Council separately announced they would introduce a set of advertising guidelines for crypt to protect consumers, ET had reported.
Kamath said that the body was consulting with government and industry stakeholders to set up clear guidelines for the industry. “Most people don’t fully understand what crypto is. It is important for us to look at some kind of guidelines so that there are no false or misleading claims. We are working on it,” Kamath said.
While ASCI guidelines are not legally enforceable, included in notifications issued by the Department of Consumer Affairs, the Food Safety and Standards Authority of India (FSSAI), and the Ayush and information and broadcasting (I&B) ministries. Violations of ASCI guidelines are treated as a violation of the government’s rules.