It claimed that while its regulations are not legally binding, the consumer protection act lays down penalties for endorsers who feature in ads that are found misleading and lack due diligence
The move comes shortly after reports of SEBI mulling to ban celebrity endorsements of cryptocurrencies appeared
ASCI recently also offered a 12-point recommendation for advertising crypto and crypto products, including the ban on celebrities endorsing crypto
ASCI or the Advertising Standards Council of India, the self-regulatory body for the advertising industry has claimed that celebrities should perform due diligence and be circumspective while endorsing or advertising crypto products.
The advertising standards’ body claimed that while its guidelines are informative and accelerate government regulation, they are not legally binding. But in case of a breach, the ASCI holds the power to name miscreants and accelerate regulation, as it has done several times previously.
Manisha Kapoor, the CEO of ASCI, stated that crypto products are unregulated and thus, prominent public figures including celebrities and sports persons need to do their due diligence on the claims they endorse.
“The Consumer Protection Act, too, lays down penalties for endorsers in case the ad they feature in is found misleading, and if they have done no due diligence. Since this is a risky category (virtual digital assets), 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,” she said.
She further added that endorsers may not have domain expertise but they must at least take the effort to do due diligence as part of their responsibilities.
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The statement comes shortly after a BusinessLine report claimed that SEBI submitted a detailed response in writing and claimed that since crypto products are unregulated, prominent public figures must not endorse or advertise crypto products or they will be held liable.
SEBI may also ask the companies putting up ads for crypto to put up an advertisement disclosure talking about the possible violation of laws, such as those in mutual fund ads.
The SEBI move follows ASCI’s 12-point recommendations for advertising crypto and crypto products.
While crypto stakeholders had their inhibitions about the recommendations, all major crypto exchanges went slow on crypto advertising and celebrity endorsements that drew flak as ‘misleading’ and could hurt retail investors.
Amid the lack of regulation and a well-structured ad policy, crypto exchanges changed track to focus on creating awareness among users.