Indian regulators are making the rulebook difficult for celebrity endorsements of crypto products. The Securities and Exchange Board of India (SEBI) has advised prominent public figures, including celebrities and athletes, to refrain from endorsing anything related to the digital asset industry.
Media reports on Monday said SEBI’s position is based on the logic that crypto products are not regulated in the Indian market, and that some of them may violate existing laws.
“Since crypto products are not regulated, prominent public figures including celebrities, athletes, etc. or their voices may not be used to endorse/advertise crypto products,” SEBI said in its recommendation. Report.
Authentication can violate existing laws
In a set of recommendations to the Parliament’s Standing Committee on Finance, the securities and commodity markets regulator said the disclaimer for the announcement stipulated by the Advertising Standards Board of India (ASCI) should also include a potential violation of laws.
The SEBI report warned eminent public figures to take responsibility for providing advocacy of violations of the Consumer Protection Act, the Foreign Exchange Management Act (FEMA), the Prohibition of Unregulated Deposit Scheme Act (BUDSA), and the Prevention of Money Laundering Act (PMLA).
Under the Consumer Protection Act 2019, false and misleading endorsements by celebrities can be punished with a fine of up to 10 lakh rupees ($12,840) in the first instance and up to 50 lakh rupees ($64,210) in subsequent incidents, eventually leading to a ban on No endorsement for three years.
She suggested reformulating the ASCI’s stipulated disclaimer to add “Transactions in crypto products may lead to prosecution for potential violation of Indian laws such as FEMA, BUDS Act, PMLA, etc.” This is in addition to the disclaimer that crypto products are unregulated and can be very risky as there is no legal recourse for fraud.
ASCI’s guidance was introduced in February of this year, and tax proposals in the 2022-23 budget for the crypto sector use the term “virtual digital assets (VDA)” for these products. The Indian government has already made it clear that the reference to VDA is purely for tax purposes, and does not imply legalization or regulation of digital assets.
A path to strict crypto policy
SEBI’s recommendation to make celebrity endorsement difficult for crypto products is the latest in a string of tough policy decisions by Indian authorities.
Recently, sources claimed that tax authorities plan to impose a higher 28% GST on crypto products, treating them as luxury items on a par with gold, betting, lotteries, and horse racing. This follows the imposition of a hefty 30% income tax on digital asset profits, effective April 1, 2022, with no provision to offset losses. This has affected the trading volume on the stock exchanges, and some are even considering fleeing the country.
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