Heightened marketing and advertising campaign for different cryptocurrency assets during Sunday night’s T20 World Cup match has underlined the regulatory vacuum for cryptos.

During the India-Pakistan clash on Sunday, viewers were bombarded with advertisements by CoinSwitch, BitBns, CoinDCX. CoinDCX — which roped in actor Ayushmann Khurrana — and CoinSwitch Kuber played up the high-visibility quotient with popular Bollywood actor Ranveer Singh as brand ambassador for their ad campaigns on TV and digital platform. In almost all ads for crypto assets whose value is suspect, disclaimers were too small and read out far too rapidly for viewers’ comprehension.

Chandrima Mitra, Partner, DSK Legal, said since crypto assets are currently unregulated and the Advertising Standards Council of India (ASCI) has not set out any specific guidelines for advertisement of crypto assets, such platforms are vulnerable to legal issues and consumer complaints. “While we await guidelines and regulations, currently we advise our clients to ensure that the advertisements promoting the crypto platforms contain specific and clear disclaimers mentioning that crypto assets are unregulated digital assets and not legal tender, subject to market risks, etc,” Mitra said.

Area of concern

Experts feel there is a need for ASCI to step in. According to Lloyd Mathias, Business Strategist and Angel Investor, ASCI should keep a close watch as the cryptocurrency space is fast-evolving.

“It should take suo motu cognisance to come out with guidelines for cryptocurrency-related ads in the interest of consumers,” he said. The ASCI seems to be pondering over the matter. “We understand that cryptocurrencies and their advertisements are an area of increasing concern; we are already consulting different stakeholders to protect the interests of consumers,” said Manisha Kapoor, Secretary-General, ASCI.

The high-decibel campaign and market movement has evoked a renewed cry for a regulatory framework. Former Finance Secretary SC Garg, who had led an inter-ministerial panel that recommended that all private cryptocurrencies except any virtual currency issued by the State should be prohibited, told BusinessLine that the Government must look at a comprehensive framework for cryptocurrency and treat it as a separate asset class (including as a currency).

‘RBI should step in’

He, however, felt that the widely expected Cryptocurrency Bill was unlikely to be introduced in the upcoming Winter Session. The RBI, which is looking to introduce a Central Bank Digital Currency (CBDC) as a legal tender in digital form, may introduce a pilot project by December, this year.

According to former RBI Governor D Subbarao, the central bank cannot shy away from regulating cryptocurrencies. “Central banks around the world are getting concerned about the increasing popularity of cryptocurrencies. There is also the issue of financial stability and if banks are exposed to cryptocurrencies, they will be taking unacceptable levels of risk” he said at a recent NCAER webinar.

RBI had, in 2018, issued instructions to banks to stop providing services to crypto trading platforms. This has led to uncertainty about the status of virtual currencies in India. However, the Supreme Court, in March 2020, struck down the RBI’s instructions.