Crypto ads highlight the highs but downplay the risks involved: Experts

The ASCI reiterated that provisions of existing rules and regulations require ads to be honest and transparent and advertising of all categories, including crypto, must follow these guidelines

e4m by Kanchan Srivastava
Published: Nov 23, 2021 9:01 AM  | 7 min read

“Bohot hard kuch nahi hai. Sab simple hai. Lag ja re bachche CoinSwitch pe. Kuch toh badlega.” (Nothing is very hard. Everything is simple. Get on CoinSwitch my child. Life will be changed.)

Actor Ranveer Singh’s recent ad for CoinSwitch Kuber, a cryptocurrency exchange platform, shows that cryptocurrency is the future and it is simple to get there.

Playing across TV channels and OTT platforms since October, the ad shows Singh in his Gully Boy avatar encouraging commoners to invest in bitcoin. Other crypto ads in print and other platforms paint a similar rosy picture of the digital currency that has created a sensation among youth across the world. 

With less liquidity and more volatility, cryptocurrency prices can soar or plummet within hours. The case in point is South Korean show “Squid Game” token that fell 99% in a single day after delivering swift gains of 75,000%.

Their flashy ads highlight the highs, but downplay the risks. “The ads of mutual funds and other financial products clearly explain the risks involved in investing in those instruments. Being honest about telling consumers both positives and negatives is considered the best strategy to get success. However, if you watch crypto ads on TV, you will hardly notice the risks involved. The last sentence about the risks is displayed so fast that the majority of the viewers can’t notice. This raises the suspicion and suggests that they are cheats.”

Catch em young

There are more than 14,000 other crypto coins in existence including the Sandbox, Decentraland, Avalanche and Wax that have been among top performers in the trading markets. 

Crypto brands ride on India’s most popular sport-cricket. Their ads flooded the TVs and social media during the concluded IPL and T20 World Cup cricket tournaments.  

Such ads primarily target digital and mobile-first users between 25 and 40 age group in the tier 1 and tier 2 cities of India who can be easily lured to the attractive ads, experts say. 

Co-Founder and Chief Creative Officer, Tidal7 Brand and Digital, KS Chakravarthy, popularly known as Chax, tells e4M, “The flashy crypto ads seek to lure anyone and everyone who has got a few hundreds rupees in hand. By keeping investment limits very low, they can easily attract a young population. Ranveer Singh’s ad tries to portray that even sadak chhap people can put money in crypto and change their lives.”

Sujata Dwibedy, Group Trading Director, Amplifi India, dentsu agrees that Crypto ads are often misleading and lure the investors into a volatile market. 

“These are just the initial days of their ad spending. The spends were sub 200 Crores this year and it will grow in the coming years. We should watch out for IPL and other big sporting events and the Impact properties in the coming 2 years, this category would dominate soon,” says Dwibedy. 

This is where the young audience is. WazirX, for instance, started advertising during IPL and then sponsored UEFA Euro 2020 and the India-Sri Lanka cricket tournament on Sony's over-the-top (OTT) video streaming platform SonyLIV.

Unlike stock markets which operate on weekdays and for certain hours, cryptocurrency trading takes place 24X7, making conditions ideal for the digital-first, always-on connected generation.

Going by the publicly available data, this strategy seems to be working. Indians had parked nearly $6.6 billion (Rs 49,189 crore) in cryptocurrencies until May this year, as per a Bloomberg report. The country has the highest number of crypto owners in the world at 10.07 crore, according to broker discovery and comparison platform BrokerChooser. 

Regulation must

Dwibedy notes, “Cryptos need to be regulated in their communication. The risk involved needs to be stated clearly instead of just talking about the multiplier effect. Just like any other Finance category, adoption can only increase when there is education. They need to work harder as a category on increasing the awareness and demystifying the concept first, to see the step change and ROI on their investments.”

Chakravarthy says, “There are a lot of grey areas in the crypto ads. This must be controlled. However, it must come from the government. At present, the entire crypto market is unregulated. There is no clarity about their legal status. The government’s stand is confusing. The RBI had announced long ago that it would bring its own legal cryptocurrency. Somewhere some people continue to make money but the government has been dragging its feet to do something about it.”

He adds that the crypto market is like a bubble that will burst someday and crores of innocent young people will lose their hard-earned money unless the government comes up with some clear-cut norms. 

Crypto Council silent

The Blockchain and Crypto Assets Council (BACC), a part of Internet and Mobile Association of India (IAMAI), had announced the appointment of CoinSwitch founder Ashish Singhal and CoinDCX co-founder Sumit Gupta as its co-chairs in October end only. 

E4m sought to get the comments from Singhal and Gupta. Among a set of questions sent to the crypto council were: Do they have any plans to tone down their ads after recent observations of a Parliamentary committee that felt some ads are misleading and confuse the investors due to inflated claims?

After repeated follow-ups, the IAMAI spokesperson informed us, “We won't be able to respond to the queries at this juncture.”

ASCI gets 3 complaints, says 'Work In Progress'

Section 89 of the Consumer Protection Act 2019 states that a manufacturer or service provider involved in a “false or misleading advertisement” that is “prejudicial to the interests of consumers” faces imprisonment up to two years and a fine up to Rs 10 lakh.

The Advertising Standards Council of India, a self-regulatory body, has general guidelines for ads, not specific to cryptocurrency though. The ASCI has received three complaints with regards to misleading crypto ads, says Manisha Kapoor, the council’s secretary general, told e4M. 

On asking ASCI’s plan of action, Kapoor said, “We understand that cryptocurrencies and their advertisements are an area of increasing concern, we are already consulting various stakeholders to protect the interests of consumers. It is work in progress for now.” 

She further explained, “The ASCI code requires all ads to be honest and truthful. Ads should not distort facts or mislead consumers by omission, ambiguity, or implication. Ads should not be framed in a way that exploits consumers’ lack of experience or knowledge. Advertising of all categories, including crypto, needs to follow ASCI guidelines which are already in place.”

Not only this, ASCI is also engaging with the industry as well as government stakeholders to determine ways in which the industry can comply with the ASCI codes, she noted. 

Upon asking whether any action has been taken so far against any Crypto company or exchange on accounts of misleading ads? 

She responded, “Provisions of most existing rules and regulations and guidelines require ads to be honest and transparent. Hence any ad making a false or fraudulent claim is already in violation of such rules. In India, this would be the ASCI code as well as the consumer protection act. As such there may be room to interpret or clarify these rules more specifically for crypto ads, and we have been in lengthy consultations with stakeholders over the past many weeks to arrive at some consensus on this issue.”

Legal Status

In July 2021, the Delhi High Court issued notice to the centre, SEBI, and cryptocurrency exchanges in a plea seeking guidelines to regulate the advertisement of cryptocurrency asset exchanges in India. The petitioners sought guidelines mandating that the disclaimer text cover 80 percent of the screen, with a slow voice-over lasting five seconds.

The plea also prayed that the union ministry of information and broadcasting should prevent more audio-visual ads from being aired on television until the above guidelines are issued.

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