In light of recent concerns raised by the Indian Parliament’s Standing Committee on Finance, the Securities and Exchange Board of India (SEBI), a regulator of the securities market in India has proposed banning public figures, including celebrities and sportspersons, from advertising and endorsing crypto products. The regulator also suggested that these individuals be held liable for any violations of law that occur while promoting crypto products.
SEBI’s proposal for crypto advertising and approval
This proposal comes in response to concerns raised by the Indian Parliament’s Standing Committee on Finance regarding the lack of regulation surrounding cryptocurrencies.
Considering SEBI is the guardian of investors’ interests in securities, preventing public figures from endorsing crypto products will help protect consumers from potential scams and fraudulent activities.
The Advertising Standards Council of India (ASCI) has also released guidelines stating that celebrities and other prominent figures should exercise caution when endorsing cryptocurrency products.
ASCI’s guidelines state that transactions in cryptocurrencies carry a risk of violating Indian laws and that celebrities appearing in such advertisements should ensure that they are not misleading consumers.
The stance of the Indian Government
The Government of India is still working on its official policy stance toward cryptocurrencies. However, Finance Ministry officials have met with representatives from the International Monetary Fund (IMF) and the World Bank to discuss possible regulations. The Finance Minister of India has stated that any decision on crypto regulation will not be made hastily. Currently, crypto income is taxed at a rate of 30% in India.
Moreover, the securities regulator proposed that public figures be liable for endorsing crypto products that may violate certain laws, including the Consumer Protection Act. In addition, SEBI suggested adding the following statement to the ASCI disclaimer: “Transactions in crypto products may lead to prosecution for potential violation of Indian laws such as FEMA, BUDS Act, PMLA, etc.”
In addition, SEBI suggested adding the following statement to the ASCI disclaimer: “Transactions in crypto products may lead to prosecution for potential violation of Indian laws such as FEMA, BUDS Act, PMLA, etc.”
Moreover, Portugal also unveils a capital gains tax on crypto. ASCI’s crypto guidelines, which came into force on 1 April, state: “Since this is a risky category, celebrities or prominent figures appearing in such advertisements should take special care to ensure that they have made statements and claims. We have done our due diligence regarding the advertisement so as not to mislead the consumers.”
When did Crypto products Start Gaining popularity in India?
Cryptocurrencies started gaining popularity in India after the government demonetized high-value currency notes in 2016. This led to a cash crunch and people started looking for alternative investment options.
Cryptocurrencies are seen as a viable option by many due to their decentralized nature and lack of government control. Moreover, Bitcoin price analysis shows the most popular cryptocurrency, surged to a record high of $20,000 in December 2017, leading to a spate of new investors entering the market. Given the volatile nature of cryptocurrency and consumer interest, SEBI’s recommendation may not be entirely unjustified.
The crypto market has fallen precipitously in recent weeks. There is market turbulence as a result of TerraUSD’s recent drop from $116 on April 5 to $O on May 13, representing a 100% decrease in its worth. Furthermore, the world’s largest cryptocurrency, Bitcoin, has lost 35.75 percent YTD and is now worth Rs 22.85 lakh. Since reaching 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 designated virtual digital assets (VDA) for taxation purposes solely. Because VDAs are a risky category, SEBI encourages renowned people with a large following to exercise extreme caution and conduct a thorough study on the statements and claims made in the advertisement so that consumers, particularly the young, are not misled.