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Indian Court Issues Notice On Plea Against Cryptocurrency Ads

The Delhi High Court issued the notice to the government and markets regulator on a plea seeking standardized disclaimers.

NEW DELHI — An Indian court issued notices to the apex commodity and markets regulatory body, Securities and Exchange Board of India (SEBI), the Centre, and others, on July 14 on a plea seeking direction for standardized disclaimers for cryptocurrency ads.

The plea in front of the Delhi High Court sought direction to take effective steps and issue appropriate guidelines against crypto exchanges advertising on national television without standardized disclaimers.

A Delhi High Court bench of Justice D.N. Patel and Justice Jyoti Singh sought responses from the Ministry of Information and Broadcasting, Securities and Exchange Board of India, and crypto startups Wazir X, CoinDCX, and CoinSwitch Kuber.

The matter is slated for August. 

The petitioners Ayush Shukla and Vikash Kumar sought direction from the Securities and Exchange Board of India to issue guidelines requiring that disclaimer text cover 80 percent of the screen, with a voiceover read slowly and lasting five whole seconds.

The petition said television ads run by crypto exchanges currently have a line of text smaller than the standard size with a message saying, “Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks.”

“The plea also makes Securities and Exchange Board of India and Secretary, Ministry of Electronics and IT and Government of India as respondents,” tweeted Sharad Chandra, a Blockchain and emerging tech evangelist.

The plea said that investing in crypto assets is inherently riskier than traditional equity investment products in the share market, mutual funds, and other forms of financial products.

The petition also said that crypto assets must be given the same treatment as mutual funds to protect retail investors who are not aware of their risk profile.

Crypto trading is highly dependent on market sentiment and regularly rises when some celebrities make positive remarks and also declines when celebrities say something negative, the petition said.

“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 thereof,” the petition said.

“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 percent coverage in terms of the size on the screen to be viewable and readable by the investor, may instill 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.”

(With inputs from ANI)

(Edited by Abinaya Vijayaraghavan and Praveen Pramod Tewari)