No blanket ban: Crypto law might regulate digital currencies, ads likely to be toned down
The legislation may stipulate a minimum amount for investments in digital currencies while banning their use as legal tender, as per media reports
The much-hyped Cryptocurrency Bill, which is likely to be tabled in the upcoming session of the Parliament, may not impose a blanket ban on cryptocurrencies. The fresh draft of the “The Cryptocurrency & Regulation of Official Digital Currency Bill, 2021” seeks to regulate the market, media reports said on Wednesday soon after the crypto markets crashed.
Although there is no clarity over the law and everyone has to until it is tabled, the sources say the legislation may stipulate a minimum amount for investments in digital currencies, while banning their use as legal tender. The parliament website had created a sensation Tuesday night when they posted a description of the bill by saying the bill seeks to prohibit all private cryptocurrencies except “certain exceptions to promote the underlying technology of cryptocurrency and its uses.”
In response, all major digital currencies saw a fall of over 15 percent. After the news of regulation surfaced, markets seem to stabilize. According to the Blockchain and Crypto Assets Council, India holds about ₹6 lakh crore in crypto assets.
Ripple Effect In Ad Sector
The news of a possible ban on crypto created a ripple effect in the advertising sector as well. Crypto exchanges have pumped close to Rs 200 crores into their digital and television campaigns and in high decibel properties like IPL and world cup sponsorship, according to Sujata Dwibedy, Group Trading Director, Amplifi India, dentsu. People across India speculated about the future of crypto exchanges and their ads.
Industrialist Harsh Goenka tweeted a video titled “Crypto sale in India.." to highlight the current status of crypto. Jay Hao, CEO of cryptocurrency exchange OKEx.com, said, “We urge the government to take a nuanced approach towards regulating crypto assets in India. With the positive outcome of the cryptocurrency bill, India will embark on an exciting journey of becoming the global leader in crypto, Defi, and NFTs.”
Hao noted, “India is home to the highest number of crypto owners in the world and the onus lies on the government to protect the interest of a large number of crypto investors in the country. I strongly believe that the global crypto community will be watching closely the developments around India’s crypto bill.”
Lloyd Mathias, Business Strategist and Angel investor, said, “The Government proposal to regulate cryptos is a welcome step but one awaits the details of the planned regulation. The regulatory focus should be on wallets and the onus should be on the citizens to get a verified wallet. This way any crypto industry players will simply have to onboard verified wallets onto their platform.” This can further integrate with crypto exchanges as well as non-fungible token (NFT) marketplaces so that they can be a clear differentiation between domestic and cross-border transfers, he noted.
Misleading Ads Under Scanner
There are more than 14,000 other crypto coins in existence including the Sandbox, Decentraland, Avalanche and Wax, which have been among top performers in the trading markets. Crypto ads in print and other platforms often paint a rosy picture of the digital currency to create a sensation among youth across the world. Flashy ads highlight the highs, but somehow downplay the risks, ad sector experts say. With less liquidity and more volatility, cryptocurrency prices can soar or plummet within hours.
Such ads primarily target digital and mobile-first users between 25 and 40 age group in tier 1 and tier 2 cities of India, who can be easily lured to the attractive ads, experts say. Mathias added, “We expect that the unbridled advertising often using well-known celebrities may scale down a bit, till regulatory clarity emerges.” ASCI has not been able to nail them so far despite three written complaints.
Big Celebs Are Brand Ambassadors
There are currently around 15-20 million crypto investors in the country. Crypto platforms have been roping in top celebrities like Amitabh Bachchan, Ranveer Singh and Ayushmann Khurrana to advertise crypto trading in India.
Private digital currencies have gained popularity in the past decade or so. However, Indian regulators and governments have been skeptical about these currencies. The Reserve Bank of India (RBI) wants a complete ban on digital currencies as the central bank feels it could affect the nation’s macroeconomic and financial stability. Earlier in 2018, the RBI had banned imposed a ban on digital currencies citing 'serious concerns' about the risks involved in private cryptocurrencies. Later, the ban was lifted by the Supreme Court in 2020.
The government is considering taxing gains from cryptocurrency in the next budget. Last week, RBI Governor Shaktikanta Das said that the country needs much deeper discussions on the issue. Also, the Standing Committee on Finance, chaired by BJP member Jayant Sinha, met the representatives of crypto exchanges, blockchain, and Crypto Assets Council (BACC), among others last week, and arrived at a conclusion that cryptocurrencies should not be banned, but should be regulated.
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