The petition filed by two advocates also seeks guidelines mandating that the disclaimer text cover 80% of the screen, with a voice over read in a slow manner lasting five whole seconds.
Not more than a year ago, we witnessed the first crypto advertisement on an OTT platform by Zebpay. The ad was simple, it looked like a screen saver, it ran for 10 seconds. At the bottom of the image, there is a disclaimer, barely visible at first glance. It says “Crypto is unregulated digital currency, not a legal tender and subject to market risks”.
The saga continues today with WazirX, CoinSwitch, CoinDCX and other exchanges buying TV spots on the most anticipated TV properties like IPL, Football, Cricket Worldcups and more.
To their credit, these exchanges never ran these ads without a disclaimer. However, two lawyers have taken objection to the way these disclaimers are displayed, or we can say, not displayed.
Petition filed in the Delhi High Court
The petition filed by two advocates Aayush Shukla and Vikas Kumar seeks guidelines mandating that the disclaimer text cover 80% of the screen, with a voice over read in a slow manner lasting five whole seconds. Just like they are mandated for Mutual Fund advertisements.
First reported by Bar and Bench, the petition states that crypto assets are inherently riskier and more volatile investment products than traditional shares in the equity market.
Advertisements run through media for mutual fund products have guidelines put in place. Therefore, the petitioners submit that similar guidelines for crypto exchanges are the need of the hour.
“Crypto-assets must be given the same treatment as mutual funds are, if not more, to protect the retail investors who are not aware of the inherent characteristics of crypto-assets and their risk profile, especially considering the fact that they are highly dependent upon supply and demand in the market and regularly rise when certain celebrities in the crypto-world make positive remarks and also regularly decline when said celebrities within the crypto-world make negative remarks,” the plea stated.Source: Bar and Bench
The petitioners also submit that the disclaimer text currently included in the advertisements stating, “Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks” is not in a legible font, does not include voice iteration for more than or at least 5 seconds and the line of text is smaller than the standard size, displaying for less than two seconds.
“Risk profile (of crypto) is inherently greater”, says Aayush Shukla adding there are guidelines for stock brokers and mutual funds for audio-visual ad disclaimers, so there is an urgent need to have similar ones for crypto.
Court Issues Notice to Exchanges and Others
A Bench of Chief Justice DN Patel and Justice Jyoti Singh issued notice to the exchanges, Central government, Securities and Exchange Board of India (SEBI).
The formal list of respondents in the AAYUSH SHUKLA & ANR. Vs. MS WAZIR X & ORS case are:
- WazirX Exchange
- CoinDCX Exchange
- CoinSwitch Kuber
- Secretary Ministry of Information and Broadcasting
- Securities and Exchange Board of India (SEBI)
The petition also asks the Union Ministry of Information and Broadcasting to prevent any more audio-visual advertisements from being run on television till the guidelines are issued.
What do you think the exchanges should do? Should they show disclaimers like Mutual Fund Ads show?
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