Krishma Shah (Advocate)
LinkedIn profile: linkedin.com/in/krishma-shah-859a1b125
The latest trend breaking grounds is the Virtual Digital Assets (“VDA”), commonly referred to as crypto or NFT products that have been creating a stir in the market and has gained immense popularity. While cryptocurrency added modern investment and trading opportunities primarily focusing on profit, NFTs have an intangible value attached to it driven by one’s inclination to art, artist, experience, culture etc., which carries an intrinsic and emotional value.
Several startups and business entities have started exploring business in VDA. These startups are coming up with exciting advertisements. Sometimes, these advertisements may be misleading and lure customers into risky endeavors. Given that VDA is still an emerging concept and an unrecognized space, the Advertising Standards Council of India (“ASCI”) on 23.2.2022 released the guidelines for ‘advertisement and promotion of virtual digital assets and services to be effective from 1.4.2022 (“Guidelines”), to safeguard the interest of consumers and to ensure that advertisements do not mislead or exploit consumers’ lack of expertise on such products. Hence, if you are a Startup/business entity or an ad filmmaker, you should be aware of these Guidelines. Further, if you are a celebrity or celebrity manager, you should also pay heed to these Guidelines.
In this article, we will discuss two important aspects of the Guidelines. Firstly, the responsibilities of a business house to provide a clear disclaimer to customers. Secondly, the responsibilities of celebrities while promoting VDAs. If you are a startup/business house dealing with VDA or an advertisement agency, advertisement production house, Ad-Filmmaker, celebrity manager, etc., this article is a must read for you.
Part 1: Importance of disclaimer:
In light of its novel and evolving nature, with most of us being alien to the technical aspect of the block-chain technology of the VDA, neither do the consumers possess the necessary expertise nor can short-sighted statistics be reliable, thus, casting such duty on the marketers as well as endorsers of such products. Armoring consumerism, with the significantly high volatility of VDA products, the guidelines compel advertisements to spell out the risks associated with such transactions. ASCI mandates the following disclaimer to be exhibited in all VDA ads:
“Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.”
Albeit disclaimers always existed, additionally, the new Guidelines have made it unequivocally clear that the disclaimer must be “Prominent” and “Unmissable” by an average consumer and have laid down specifications for advertisements across mediums like print, video, audio, social media posts, including in case of disappearing posts and stories in terms of font, space, length, pattern, placement of such disclaimers.
Being an unrecognized concept, ASCI Guidelines has attempted to maintain clarity and a clear distinction between regulated and unregulated products, whereby, illustratively, ASCI has prohibited the use of words like “currency”, “securities”, “custodian” and “depositories” which are usually attributed to regulated products in advertisements. No comparison can be made between a VDA and any other regulated asset.
The guidelines aim to avoid any advertisement that may mislead, misguide, give false information, or exploit the consumers due to their lack of expertise/ knowledge on the subject, thus, direct ads to be explicit, accurate, updated and unbiased at all times. It also casts an additional responsibility on the advertiser to provide their details and information to enable the consumers to contact them. It will deter misleading and misguiding advertisements. Adopting a customer-centric approach, these Guidelines intend to create more accountability from the marketers. The Guidelines lay down specific requisitions and reservations as to the characters, content, script etc., to be followed for any advertisement or promotion of VDA.
Part 2: Responsibilities of celebrities:
While brands will have to relook their advertisement strategies and budget in light of the new guidelines, with celebrities like Amitabh Bachchan, Salman Khan, Deepika Padukone and others joining the bandwagon and announcing their expedition into the NFT world, and others like Ayushmann Khurrana, Ranveer Singh, Badshah endorsing and promoting crypto, indeed, their legal consultations and advisory will increase to ensure that their engagement complies with the newly introduced ASCI Guidelines, if not deter them from taking up such assignments.
The Guidelines cast a significant responsibility on celebrities and prominent personalities who appear in VDA advertisements. The new Guidelines shall invite multiple new facets of negotiations between the advertiser and a celebrity as ASCI expects stars to take special care and conduct their due diligence about the statements and claims made in the advertisement to not mislead consumers given the risks associated with this category of transactions. The advertiser thus, must ensure the integrity of its product and further that the same translates to the celebrity endorsing the same as well, not to mention the lengthy legal documentation the stars may insist in light of the Guidelines.
The immense power of celebrities and influencers on today’s audience is unmatched. Thus, making consumers vulnerable to their endorsements. For this reason, the ASCI guidelines put an onus on the celebrities to conduct their due diligence before endorsing VDA products to ensure that consumers are not lured or misled in any way about the product due to their lack of awareness.
While ASCI has laid down these guidelines for advertising and promoting virtual digital assets and services, it has clarified that its guidelines should not be read as a legal recognition or endorsement of the industry or sector since that is a matter of government policy. The guidelines will apply to all advertisements released or published on or after 1st April 2022. It is also clarified that advertisers and media owners must ensure that all earlier advertisements must not appear in the public domain unless they comply with the guidelines post 15th April 2022.
Hence, if you are a startup and business entity dealing with VDA, ad filmmakers, celebrity managers, etc., you should be aware of this Guidelines. We shall keep you updated if any further development happens in this domain.
The press release is available at: https://ascionline.in/images/pdf/vda-guidelines-press-release-feb-23.pdf