The Securities & Exchange Board of India (SEBI) has reportedly suggested that prominent public figures such as celebrities and sportspeople should not endorse crypto products. The companies putting up ads for crypto also need to put up an advertisement disclosure talking about the possible violation of laws, the regulator said.
A BusinessLine report, citing sources, said that SEBI communicated its view to the Parliamentary Standing Committee on Finance when members quizzed officials on various aspects of crypto. The regulator then submitted a detailed response in writing and claimed that since crypto products are unregulated, prominent public figures shall not be used for endorsement/advertisement of crypto products.
The report also stated that SEBI has made it clear that the prominent public figure/celebrity would be held responsible for making any endorsement which would be a possible violation of the Consumer Protection Act or any other law.
The move comes shortly after the Advertising Standards Council of India (ASCI) recommended a set of guidelines for advertising crypto and crypto products.
Need For Ad Regulation In Crypto
Crypto assets have been gaining popularity in India, with more than 20 Mn Indians investing in it. This has led to a race among crypto exchanges to acquire users and grow trading volume.
In October last year, the crypto exchanges came out with a series of ad campaigns with celebrities to lure users. While CoinSwitch Kuber brought Bollywood star Ranveer Singh as its brand ambassador, CoinDCX roped in Ayushmann Khurrana for a similar role. Bitbns also onboarded a slew of actors, including Biswapati Sarkar of TVF fame, veteran actors Alok Nath and Archana Puran Singh, and noted singer Anup Jalota.
With crypto still evolving and lacking a well laid-out set of regulations that could control it like traditional financial assets, the ads received a lot of flak from some netizens and later, ASCI.
The ASCI is a voluntary self-regulatory organisation comprising members from across the advertising sector. In February 2022, it came up with a set of advertising guidelines for crypto entities seeking to promote their products and services through advertising in media.
The plethora of ads stopped as fast as they had started.
All major crypto exchanges went slow on crypto advertising and celebrity endorsements that drew flak as ‘misleading’ and could hurt retail investors. Amid the lack of regulation and a well-structured ad policy, crypto exchanges changed tack to focus on creating awareness among users.
SEBI’s latest suggestion to ban celebrities from advertising cryptos mirrors the regulations in place for mutual funds and other regulated financial assets. The disclaimers on the mutual fund ads, too, warn users of the market speculations and the riskiness of the asset.
