Cryptocurrency advertisements need adequate disclaimers: Delhi High Court

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The Securities and Exchange Board of India (Sebi) and others associated bodies should take adequate steps and issue appropriate guidelines against cryptocurrency exchanges in India advertising on national television. The court stated that these ads are being aired without adequate standardized disclaimers.

The Ministry of Information and Broadcasting, SEBI, M/s Wazir X, M/s CoinDCX and M/s Coinswitch Kuber have been sought responses from the Division Bench of Justice DN Patel and Justice Jyoti Singh

The Petitioners Ayush Shukla and Vikash Kumar petitioned for Sebi to issue guidelines mandating disclaimer text covering 80% of the screen, with a slow voiceover of five seconds. The advertisements currently have a line of text smaller than the standard size stating, “Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks”.

“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 per cent 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,” stated the plea.

Unlike fiat currency which is governed by the regulator, cryptocurrency is governed by the simple rule of demand and supply. It functions more like gold which is similarly governed by the demand and supply rule. It is subject to extreme volatility; that’s why experts say a proper disclaimer is needed while advertising cryptocurrencies.

Reserve Bank of India (RBI) has many times issued a warning while maintaining a stance of a complete ban on virtual currencies. The regulator has issued the warning in the past as well that any user, holder, investor or trader dealing with virtual currencies should do at his own risk.