The Securities and Exchange Board of India (SEBI) suggested that crypto products should not be endorsed by any “prominent public figures, including celebrities and athletes,” and that the advertiser should speak out about potential violations of laws.
As in history, crypto is not regulated and named as a Virtual Digital Asset (VDA) for tax purposes only.
SEBI communicated its view to the Parliament’s Standing Committee on Finance when it questioned members responsible about various aspects of crypto last month, sources said. business line. Now, the organizer has provided a detailed response in writing. The sources added that the Ministry of Finance has also asked the regulator for its views on advertising as well as guidelines by the Advertising Standards Board of India (ASCI).
“Since crypto products are unregulated, prominent public figures including celebrities, athletes, etc. may not use their voice to endorse/advertise crypto products,” a source quoted a SEBI response as saying. Furthermore, it stated that an eminent public figure would be responsible for making the endorsement a potential violation of the Consumer Protection Act or any other law.
The source also said that SEBI had proposed reformulating ASCI’s disclaimer by adding “deals in crypto products may lead to prosecution for potential violation of Indian laws such as FEMA, BUDS Act, PMLA, etc.”, after talking about the risks and lack of legal remedies fraudulently.
Obstruction of the right to earn
Lloyd Mathias, business strategist and independent director, said, “A complete ban on advertising a particular category is one thing. But if there is no ban on advertising a product, deciding who can endorse that product or not is not debatable.” He added that this could also impede any public figure’s basic right to earn.
Last November, amidst a crowd of crypto-celebrity ads, Prime Minister Narendra Modi chaired a meeting and felt strongly that attempts to mislead young people through promising and opaque ads would stop. Next, ASCI consulted with various stakeholders, including government and the VDA industry to develop a guiding framework for advertising and associated services. They were released in February and entered into force on April 1.
“Because this is a high-risk category (VDAs), celebrities or dignitaries who appear in such advertisements should take special care to ensure that they have exercised due diligence on the statements and claims made in the advertisement, so as not to mislead consumers,” the guidelines stated. .
Penalty for misleading ads
The Consumer Protection Act of 2019, also places the burden of due diligence on celebrities for claims in all advertisements. If a false or misleading advertisement is found, the Central Consumer Protection Agency can issue directives to discontinue or amend the advertisement to the respective manufacturer or famous proponents of the product. The CCPA can also impose a fine of up to ₹ 10 lakh on a celebrity for a primarily false or misleading advertisement and penalties can be up to ₹ 50 lakh for any other cases of false and misleading allegations in the advertisements.
It can also ban celebrities from endorsing any other products for up to three years. However, it adds, “No endorser will be liable for a penalty if he/she has exercised due diligence to validate the claims made in the advertisement regarding the product or service being endorsed by him/her.”
The Department of Consumer Affairs is also expected to soon finalize guidelines to prevent misleading advertisements under the Consumer Protection Act.
May 15 2022