SEBI Proposes Ban On Celebrity Promotion Of Cryptos, Says “may lead to prosecution”
SEBI has proposed that no “prominent public figures, including celebrities and sportsmen,” should promote crypto products. Companies that advertise cryptos and digital assets, according to the market regulator, should also post disclosures outlining probable legal infractions.
When members of India’s Parliamentary Standing Committee on Finance posed concerns about several aspects of cryptocurrency last month, SEBI explained its stand on the matter. As a result, the market regulator provided the Parliamentary Panel with a full written response.
In February, the Advertising Standards Council of India (ASCI) released crypto advertising rules, and the Finance Ministry invited the SEBI to disclose its position on such advertisements.
“Given that crypto products are unregulated, prominent public figures including celebrities, sportsmen, etc. or their voice shall not be used for endorsement/advertisement of crypto products,” the SEBI reportedly stated.
The market regulator went on to say that important public personalities should be held accountable for making such endorsements, which could be illegal under the Consumer Protection Act or any other law.
As per the ASCI guidelines, all ads must carry a disclaimer saying, “Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.”
According to the advertising watchdog, such a disclaimer must be made in the following manner so that it is prominent and unmissable by the average consumer.
According to SEBI, the ASCI’s disclaimer should include the possibility of legal infractions in crypto transactions. “Dealings in crypto products may lead to prosecution for possible violation of Indian laws such as FEMA, BUDS Act, PMLA, etc.”
SEBI’s proposal may not be wholly unfounded, given the volatility nature of cryptos and consumer interest.
The cryptocurrency market has dropped dramatically in recent weeks. The market is agitated as a result of TerraUSD’s Luna’s recent plunge from $116 on April 5 to $O on May 13, representing a 100% drop in value. Furthermore, Bitcoin, the world’s largest cryptocurrency, has lost 35.75 percent year to far and is now worth Rs 22.85 lakh. Since hitting an all-time high of $69,000 in November of last year, it has lost more than half of its value.
Until date, cryptocurrency has been classified as virtual digital assets (VDA) for tax purposes alone. Because VDAs are a risky category, SEBI encourages public figures with a large following to exercise great caution and conduct thorough study on the statements and claims made in the marketing so that consumers, particularly the young, are not misled.