Cryptocurrency ads under scanner after widespread criticism from stakeholders & Centre
The investment community in India has raised alarm over the advertising blitzkrieg by cryptocurrency trading platforms in the past few months trying to attract consumers into the fluid markets
India is a hotbed for the cryptocurrency industry and investment in the sector has risen to $6.6 billion in May 2021 from $923 million in April 2020, as per a recent Bloomberg report.
Crypto exchanges including CoinSwitch Kuber, WazirX, and CoinDCX had flooded TV screens with advertisements during recent sports events like the ICC T20 World Cup and Indian Premier League. Their high decibel campaigns across TV and digital platforms largely portrayed how easy it is to invest in an effort to win the quintessential Indian consumer.
For instance, ‘Bitcoin Liya Kya’ advertisement from CoinDCX played on the internet’s favourite ploy FOMO (fear of missing out) to get users to download its app and become a part of the cryptocurrency investment craze. The ad showed young users showing how a smart investment in the most recognised cryptocurrency—Bitcoin—can make a difference in one’s life.
Stakeholders and critics have now raised concerns over such ads which are allegedly puffery and misleading and have the potential to lure Indians into investing, without being aware of the risks, in an asset class notorious for wild price swings.
Dr. Sandeep Goyal, MD, Rediffusion, says, “Crypto is a touchy topic especially since there is more hype than substance. Claims, over claims, lack of understanding, lack of credibility, and lack of transparency further complicate the issue. Some operating guidelines are necessary. But that is for advertising. Who checks on the legitimacy and authenticity of the players?”
Dr Goyal points out, “Advertising is only a tiny part of the overall game. Care and caution are first needed at the principal level but given the nature of the product, that is not easy.”
Online stock broker Zerodha’s Co-founder and CEO Nithin Kamath has called for the government to bring in checks and balances for advertisements by cryptocurrency and forex trading platforms.
“If financial service businesses are allowed to mis-sell greed & easy+guaranteed returns from risky financial products, it not only harms consumers but also creates a systemic risk. The govt should put in checks not just for crypto ads, but also unregulated CFD/Forex platforms,” Kamath said in a tweet Thursday.
“These cryptocurrency ads during cricket matches are very well targeted, indeed. But the idea of making crypto look easy and safe is scary! Especially, if you don’t understand it. If you get it, great. If you don’t, it’s easy to slip into FOMO. Be careful with your investments, folks!” Praval Singh, VP - Marketing & Customer Experience, Zoho, said in a tweet on 7 November.
Government gets tough
Crypto advertisement had also emerged as an area of concern at several high-level meetings conducted this month within the government, along with industry stakeholders.
On Monday, a parliamentary standing committee discussed the opportunities and challenges posed by cryptocurrency with experts and stakeholder associations. During the discussions, one of the panel members pointed to advertisements that could entice people to invest in a volatile segment.
Last Saturday, a meeting chaired by Prime Minister Narendra Modi decided that attempts to mislead the youth through over promising and non-transparent advertising be stopped.
While the Reserve Bank of India has sought a ban on virtual currencies, citing the potential risks to consumers and financial markets, the government is mulling ways to regulate the asset class and adopt a middle path since Indians have already made large investments in cryptos.
Meanwhile, the government is working on a Bill on cryptocurrency which could be introduced in Parliament during the first week of the Winter Session.
What is ASCI doing?
Questions are being raised over the alleged inaction of India’s apex ad regulator, the advertising standards council of India, over such misleading ads.
“The crypto space is still evolving with little regulation oversight as of now”, says Lloyd Mathias, Business Strategist and Independent Director.
Mathias noted, “Many untested entities are in play in this arena. I think sooner than later some of the ads will need ASCI’s intervention to prevent misleading investors. As the crypto space is still evolving this may take a while, but I think regulation is underway.”
The private crypto sector is expected to have an ad spend ranging between Rs 150-180 crore at present which is likely to grow in order to compete with the possible launch of the government’s digital currency.
Much of the ad spend is skewed towards digital. Since most crypto users are below 40, crypto firms are spending on digital ads including ads for video over-the-top (OTT) platforms.
During the ICC World Cup, WazirX’s rivals had roped in top celebrities and spent Rs 50 crore.
Some exchanges decide to tone down ads: Reports
Now, some exchanges have reportedly decided to slow down their ad campaigns, media reports say.
However, the Blockchain and Crypto Assets Council (BACC), a part of IAMAI whose members are crypto exchanges operating in India and are signatories of a self-regulatory code of conduct that ensures they comply with basic KYC and other regulatory guidelines, has maintained a silence over the matter.
The e4m’s queries in this regard to IAMAI have not elicited any response so far.
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