INTRODUCTION
The first ever television commercial of a crypto exchange portal in India was launched by Zebpay in September 2020. It was a banner advertisement that ran for a window of 10 seconds with a simple one-line disclaimer saying: ‘Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks.’ Since then, the advertisements for crypto exchange platforms have evolved big time. We have recently seen story ads in Euro 2020 football championships, the Indian Premier League (IPL) cricket tournament, and T20 tour between India and Sri Lanka, which seems like more of an occasion specific marketing strategy. Since the coming of new Crypto Currency exchanges in our country, there have been discussions to lay down crypto laws and exchange guidelines. As much the professionals dealing in Crypto Currency in Indian hope for law to regulate this industry, they also hope that provisions must be made to take care of the advertorials and disclaimers part of such programs.
THE ONGOING CASE BEFORE THE DELHI HIGH COURT
On 14 of July this year, the Delhi High Court passed an order in the case of Aayush Shukla & Anr. vs. WazirX & Ors. on a plea filed by two lawyers, seeking guidelines for proper disclaimer in these advertisements. Currently the ads that are running on air have a theme and a story line with a one-line disclaimer running throughout in the bottom of the screen. The lawyers had asked for the disclaimer text to cover 80% of the screen while advertising and have a slow voice reading it out. There also seems to be an inconsistency how these disclaimers appear on televised screen, such as – WazirX ads have a disclaimer that appears throughout the ad, but in a small font on the corner of the screen. With CoinDCX and CoinSwitch Kuber ads, it appears right at the end. The Respondents in the case were WazirX, CoinDCX and CoinSwitch Kuber along with SEBI, and the Ministry of Information and Broadcasting. The Bench consisting of Justices DN Patel and Jyoti Singh issued the notice in response to the plea claiming that crypto assets are volatile and pose an increased likelihood of risk as compared to other investment options. The notice is addressed to all the 5 Respondents in the case wherein the Division Bench has sought responses from the Respondents.
Considering the volatile nature of these assets, the Exchanges are more concerned about the masses accepting Cryptocurrency as an asset class, they themselves want to raise awareness about the same and are likely to be ready for any changes in future regarding addition of proper disclaimers.
The plea stated that Crypto-assets must be given the same treatment as mutual funds are, if not more, to protect the retail investors who are unaware of the inherent characteristics of crypto-assets and their associated risk profile, especially considering the fact that they are highly dependent upon supply and demand in the market and it’s been evidences that they more often rise when certain celebrities in the crypto-world make positive remarks and also equally decline when said celebrities within the crypto-world make negative remarks.
The petition also asks the Union Ministry of Information and Broadcasting to prevent any more audio-visual advertisements from being run on television till the guidelines are issued.
During the IPL season in 2021, the televiewers saw a more detailed disclaimer as compared to the general one liners. It also included a voice-over which read the disclaimer out, slowly. But this was done on the part of Hotstar, the OTT platform that aired the tournament to be on a safer side.
TREATMENT OF CRYPTO CURRENCY ADVERTISEMENT IN OTHER JURISDICTIONS
Global influencers like Kim Kardashian, Jake Paul, Floyd Mayweather Jr., and DJ Khaled have appeared in ads promoting Crypto Currency over the years. Talking about the foreign regulations on crypto advert’s disclaimers, the UK advertisement watchdogs have labelled the crypto marketing campaigns as ‘red alert’ priority on its roster. The Advertising Standards Authority in the UK is also cracking down on these advertisements as it recently banned Luno’s ads as they considered them to be misleading and imprudent. Even the Spanish government has proposed to put cryptocurrencies under the helm of the National Securities Market Commission. The circular which is currently in the public space for comments, would give the financial regulator the power to insist on the disclaimer, request changes, and suspend them altogether if they’re non-compliant. Furthermore, if there are no objections, it is set to come into force on 31 August 2021.
As the Indian Government strongly looks up to the developed nation’s regulations and laws, as any other developing countries, it is likely that the legislations of developed nations would be explained and appraised while making our own. The United States (U.S.) has taken a positive stance toward Cryptocurrency. The U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) has been issuing guidance on bitcoin since 2013. Similar to Canada, Australia considers bitcoin neither money nor a foreign currency, with the Australian Taxation Office (ATO) ruling it an asset for capital gains tax purposes. El Salvador is the only country in the world to allow bitcoin as legal tender. In June 2021, the said country’s Congress approved a proposal by President Nayib Bukele to formally adopt bitcoin as a form of payment.
Looking at such influential examples to lead on, it is improbable to shut the exchanges or ban the digital currency asset in India as it still remains not much explored and is highly captivating to the millennial and GenZ class. As cryptocurrency still remains in the legal grey area for much of the world, it would not be lucrative to put the exchange platforms into a bad space on account of their ad campaigns so as to reduce their business, as it would naturally affect the nation in return. The exchanges are in this position because they have not been given a proper set of instructions and yet are performing to the best of their abilities so as to not get into trouble.
The matter is next listed towards August end which will let us know whether the advertisements would be stopped for a while or will the proper disclaimers be instituted along with the ads. As for a new learner in the crypto field, stopping the ads from airing would hamper the reach of the new asset class and its acceptability and might as well scare the masses off. Nevertheless, we will have to wait for the next hearing to know what happens next in the nascent technology.