Skip to main content

Legal Capsule by SAMVĀD: PARTNERS

A Brief Update on the ASCI’s Guidelines for Advertising of Virtual Digital Assets in India

The Advertising Standards Council of India (“ASCI”), the advertising industry’s self-governing body recently issued ‘Guidelines for the advertising of Virtual Digital Assets and linked services’ (“Guidelines”), a first of their kind in India. The Guidelines came into effect on April 1, 2022 and are applicable to all new advertisements on virtual digital assets released or published after this date. Additionally, existing advertisements on virtual digital assets (advertisements made earlier than April 1, 2022) have to be made compliant with the Guidelines by April 15, 2022.

While the ASCI is a self-governing body and these Guidelines are not binding, several major players in the industry have voluntarily become members of the ASCI and so these Guidelines have the potential to become the most broadly accepted standards with regard to advertising of virtual digital assets in India.

Virtual digital assets (“VDAs”) have been defined in the Guidelines as, “any information or code or number or token (not being Indian currency or foreign currency), generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value exchanged with or without consideration, with the promise or representation of having inherent value, or functions as a store of value or a unit of account including its use in any financial transaction or investment, but not limited to investment scheme, and can be transferred, stored or traded electronically”. The Guidelines further clarify that VDAs also include what are commonly referred to as crypto products or non-fungible tokens (NFTs).

Until these Guidelines were issued, the ASCI’s general ‘Code for Self-Regulation of Advertising Content in India’ as well as the Consumer Protection Act, 2019 were largely relied on by advertisers of VDAs to fill the lack of regulation in this area. One reason for formulation of the Guidelines was the flak faced by the industry regarding the misleading nature of existing advertisements for VDAs. For instance, the advertisement run by Bitbns, a crypto exchange, guaranteed a 4x increase in returns on its Bitcoin fixed deposit vis-à-vis returns availed on bank deposits, and the advertisement by CoinDCX, another leading crypto exchange in India, included terms such as ‘simple’ and ‘safe’, while also running a contradictory disclaimer to the effect that cryptocurrencies are unregulated and not legal tender in India. 

Some of the important standards set by the Guidelines in relation to the advertising of VDAs are:

·         All ads for VDAs, whether in print, video or audio formats (including social media posts) would have to carry a disclaimer that “Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.” The Guidelines stipulate certain conditions regarding the placement of this disclaimer for each format. In addition to these stipulations, the disclaimers must meet the minimum requirements as set out in the ASCI’s general guidelines for disclaimers, i.e., disclaimers may be clarificatory in nature but should not contradict the claim made in the advertisement, disclaimers should not conceal material information resulting in the advertisement being deceptive in nature with regard to its commercial intent, disclaimers should not correct or qualify a misleading claim made in an ad, and disclaimers should adhere to certain placement and format requirements set out in the disclaimer guidelines.

·         The disclaimer must be in the dominant language of the ad, and words such as ‘currency’, ‘securities’, ‘custodian’ and ‘depositories’ should not be used while advertising VDA products or services.

·         Ads should not contain information that is contrary to information or warnings that may be provided to customers on VDAs by regulated entities from time to time.

·         Ads should provide accurate information regarding cost/profitability of VDAs and their performance, and should not contain any guarantees regarding future profits, or give any indication that VDAs may be considered solutions to money, personality or other problems.

·         Returns of less than 12 (twelve) months shall not be relied on to advertise the past performance of VDA products.

·         VDA ads should not show minors trading or otherwise discussing such products, and celebrities involved in such ads should not make statements that are misleading to customers.

·         The ads should not compare VDAs to any regulated asset class so as to create the impression that VDAs are regulated assets.

·         VDA ads should not downplay the risks associated with trading in VDAs.

·         Details of the advertiser should be clearly provided in the ads.

Due to the fact that VDAs are relatively new products and are still evolving, and since the market for VDAs is currently unregulated, the risk of trading in these products is high. Given that, these Guidelines are a much-needed step in regulating information disseminated to potential consumers regarding VDAs. It would advisable for companies dealing with, and advertising VDAs to integrate these Guidelines into their advertising framework and marketing strategies, while they wait and watch how the VDA regulatory landscape evolves.  

This update was prepared by Neela Badami (Partner, Samvad Partners), Vishnu Y. Kale (Senior Associate, Samvad Partners) and Sushma Sosha Philip (Associate, Samvad Partners).

Popular posts from this blog

VC Interview: Shailendra Singh of Sequoia Capital India

In a recent interview to Venture Intelligence, Shailendra Singh discussed some of the firm’s newer investments in the early stage segment including in the online payments space, the progress at a few existing portfolio companies and the active role the firm is playing in helping its portfolio companies scale and succeed in India and globally. Prior to joining the firm in 2006, Singh was a strategy consultant at Bain & Company in New York and before that, an entrepreneur in the digital media industry. Venture Intelligence: How does Sequoia go about identifying potential early stage investments in India? Is there anything different you are doing today than, say, a couple of years back? Shailendra Singh: There is a lot more focus on technology investing and early stage investing. In general, as you might remember a few years ago, we were doing primarily growth investing but in the past 18-odd months, we have had a very strong focus on early stage and that’s continuing. In terms

Nasscom announces Short-listed Cos for EMERGE Product Showcase 2010

Software industry association Nasscom has released a shortlist of companies which will be showcased as part of the "EMERGE Product Showcase for 2010" at its Product Conclave 2010 event: Aikon Labs Pvt. Ltd. – A comprehensive idea and initiative management platform that utilizes Web 2.0 and social networking technologies integrated with process management, content management and analytics. The platform helps Enterprises & Academic/Research institutions in tapping ideas from stakeholders in their ecosystem and take them through a stage-gated process to execution. Elina Networks Pvt. Ltd. – Elina creates software based networking and IT management solutions that deliver business continuity and visibility, through robust network security, reliable connectivity, and effective remote IT management. Essentia Soft Solutions – Communities on the Cloud (community as a cloud service) Interviewstreet – Interviewstreet helps you to create your own customized programming tests

"Leveraged stock purchase led Arvind Rao to go astray": Forbes India

Forbes India has an article on the series of events leading to the recent controversial exit of Arvind Rao, Co-founder & CEO of listed Mobile VAS firm OnMobile. On November 23, 2010, Arvind Rao, the 53-year-old co-founder and CEO of OnMobile, bought approximately 6 lakh shares of his company from the open market, representing a little over 1 percent of the company’s total shares....At Rs 277 a share, he had to pony up nearly Rs 16.5 crore to acquire them....So he went ahead and borrowed money to buy the shares, thinking nothing of the interest it entailed or the fact that he’d need to put up nearly half his existing shareholding as collateral...OnMobile’s shares continued to fall from those levels, while Rao’s interest payments ballooned. ...Motivated by OnMobile’s growth all these years, he had never paid much attention to his salary, most of which went towards the monthly rental on his sea-facing apartment in Mumbai and his BMW 7-Series, both paid directly by the company. He r

PE-VC Investments in 2021 hit all time high of $63 Billion

Press Release: Private Equity - Venture Capital (PE-VC) firms invested a record $63 Billion (across 1,202 deals) in Indian companies during 2021, registering  a 57% rise over the   $39.9 Billion (across 913 deals) invested in the previous year ,  reports  Venture Intelligence , a research service focused on private company financials, transactions, and their valuations. (Note: These figures include Venture Capital type investments, but exclude PE investments in Real Estate). India minted a total of 44 " Unicorn"  companies (VC-funded startups valued at $1 Billion or more)  in 2021, 15 of them during Q4'21. The $23.4 Billion invested into the Information Technology sector dominated list of  Unicorns  accounted for more than 37% of the overall value of PE-VC investments in 2021. The October-December 2021 quarter (Q4'21) saw over $5 Billion (across 25 deals) being invested in such companies.  2021 witnessed eight investments worth $1 Billion or more, led by Flipkart'

LSE Podcast with Apax Founder Ron Cohen

Click Here to download an interesting lecture and interaction (at the London School of Economics) with Ron Cohen , founder of global PE firm Apax Partners. Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of data and analysis on private equity, venture capital and M&A deals in India. View free samples of Venture Intelligence newsletters and reports. Email the author at