Sebi to make celebrity endorsement of crypto products tougher
Sebi's proposal is the latest in a string of stringent regulatory decisions relating to crypto by Indian regulators
By Shashank Bhardwaj
The Securities and Exchange Board of India (Sebi) has encouraged notable public figures, such as celebrities and athletes, to avoid advocating anything related to the digital asset market, making celebrity sponsorship of crypto products more challenging.
Sebi's stance is reportedly based on the premise that crypto products are not regulated in India and that some of them may breach existing legislation. “Given that crypto products are unregulated, prominent public figures including celebrities, sportsmen, etc. or their voice shall not be used for endorsement/advertisement of crypto products,” a source cited Sebi as saying.
The Sebi also urged that the advertisement disclosure discuss the potential for law violations due to the widespread use of cryptocurrency. Furthermore, the regulatory body suggested that dealings in crypto products may result in prosecution for possible violations of Indian laws such as the Consumer Protection Act, the Foreign Exchange Management Act (FEMA), the Restriction of Unregulated Deposit Schemes Act (BUDSA), and the Prevention of Money Laundering Act (PMLA).
Under the Consumer Protection Act of 2019, false and misleading celebrity endorsements can result in a fine of up to Rs 10 lakh on the first offence, and up to Rs 50 lakh for consecutive offences, with a three-year ban on any endorsement.
“Since this is a risky category (VDAs), celebrities or prominent personalities who appear in such advertisements must take special care to ensure that they have done their due diligence about the statements and claims made in the advertisement, so as not to mislead consumers,” reads the original guidelines pertaining to crypto advertisements in the country.
Earlier this year, India had announced a hefty 30% tax on digital asset gains that took effect on April 1, 2022, with no loss protection. There are reports of a 28% GST on crypto products, classifying them as luxury items.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash