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Cryptocurrencies are still unregulated and have been designated as virtual digital assets (VDA) for tax purposes alone which calls for strict rules.
When members of the Parliamentary Standing Committee on Finance questioned authorities about different elements of cryptocurrency last month, SEBI informed them of its position, according to sources.
The regulator has now given a thorough written answer. The Finance Ministry has also requested comments on advertisements from the regulator, as well as recommendations from the Advertising Standards Council of India.
The Securities and Exchange Board of India (SEBI), India’s capital market regulator, has proposed that no well-known public personalities, such as celebrities, athletes, or others, should promote cryptocurrency. The ad disclosure would also have to include information regarding potential legal violations.
Lloyd Mathias, Business Strategist, and Independent Director however have different opinions on this matter and has said that this could hinder a celebrity figure’s fundamental and civil right to earn. Hence who can endorse what product is not to be dictated by any authority?
In a meeting held by the current Prime Minister, a consensus was achieved to debar all misleading advertisements. Following that, the ASCI met with several stakeholders and developed advertising and linked services rules. These guidelines were made effective on 1st April.
Penalties for Violation of the Law
The Central Consumer Protection Authority can fine up to ten lakh dollars If a celebrity support any fraudulent statements or even deceptive advertisements.
Repeated violations can result in a fine of up to Rs. 50 lakh and a three-year ban from partaking in any other advertisements.
The Consumer Protection Act of 2019 also places a heavy burden of proof on celebrities for any promises made in advertisements.
If a fraudulent or misleading commercial is discovered, the Central Consumer Protection Authority can order the manufacturer or celebrity endorsers of the product to terminate or change the advertisement.
There is also the possibility of prosecution for suspected violations of other laws such as FEMA, the BUDS Act, the PMLA, and others.
The Consumer Affairs Ministry will soon come to a conclusion with the Consumer Protection Act’s standards for preventing ads from making misleading claims and the guidelines will roll out soon.
