Delhi HC issues notices on plea seeking disclaimer norms for cryptocurrency ads
Petitioners have sought directions for MIB and SEBI to issue guidelines/rules against crypto-asset exchanges in India that are advertising on television without adequate standardised disclaimers
The Delhi High Court has directed Ministry of Information and Broadcasting (MIB), SEBI (Securities and Exchange Board of India) and cryptocurrency companies to file responses on a petition filed by lawyers Ayush Shukla and Vikash Kumar.
The petitioners have sought directions for MIB and SEBI to take effective steps and issue appropriate guidelines/rules against crypto-asset exchanges in India that are advertising on national television without adequate standardised disclaimers.
Apart from MIB and SEBI, the Division Bench of Justice DN Patel and Justice Jyoti Singh on Wednesday sought responses from Wazir X, CoinDCX and Coinswitch Kuber. The matter has been listed for hearing in August.
The petitioners have urged the court to direct SEBI to issue guidelines mandating that disclaimer text cover 80% of the screen, with a voice-over read in a slow manner and not speed-read, lasting a duration of five whole seconds, against audio-visual advertisements run by crypto-asset exchanges.
The petition states that crypto-assets are inherently riskier than traditional equity investment products in the share market, mutual funds as well as all other forms of financial products offering investment opportunities.
It also contends that the audio-visual advertisements run by the firms involved in the business have a line of text smaller than the standard size (minimum 10 font size) stating along the lines of "Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks".
It also said that there is no voice-over and in numerous advertisements, the text displayed is less than two seconds, despite the fact that it is an improbable observation that viewers will make when watching the advertisement due to the placing of the text on the screen, the size of the text and the duration of the text (being less than even two seconds in numerous advertisements and in all advertisements being less than five seconds).
The plea stated that 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 petitioners also argue that an ordinary retail investor who views the audio-visual advertisement on television run by the firms involved on a regular basis, as well as on online websites like YouTube, may suffer immense losses as a result of thereof whilst on the other hand; having a disclaimer on screen after the end of the advertisement with voice over in English and Hindi (as may be appropriate) and correct placing and at least 80% coverage in terms of the size on the screen to be viewable and readable by the investor, may instil wisdom of researching and reading up on the risk profiles surrounding crypto-assets prior to investing his hard-earned money in digital assets not understood by him.
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