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Celebrities should stop endorsing cryptocurrency, says SEBI

The Securities and Exchange Board of India urges celebrities to avoid endorsing cryptocurrency considering the risks involved

SEBI has also approached the government about expanding its influence on social media platforms. The Ministry of Consumer Affairs will likely issue updated crypto advertising standards soon.

The Indian Securities regulator (The Securities and Exchange Board of India) has advised against promoting crypto assets by “prominent public figures.”

According to sources, the watchdog has submitted its crypto recommendations to the Parliamentary Standing Committee on Finance. Even though there are no formal standards in the sector, SEBI talks about possible violations of disclosure laws on crypto advertisements.

“As this is a risky segment (virtual digital assets),” the guidelines reportedly say, “celebrities and other well-known people who appear in these ads must take extra care to make sure they have done their thorough research on the proclamations and claims made in the ads so as not to mislead consumers.”

ASCI guidelines have been changed.

The government acknowledged the virtual asset industry in February, but solely to bring it into the country’s taxation structure.

According to reports, the Finance Ministry has contacted SEBI for its opinion on ASCI rules.

ASCI, the India’s Advertising Standards Council, introduced a set of 12 guidelines for promoting virtual digital assets that went into effect on April 1. (VDA). The self-regulatory industry association required that crypto marketing include disclaimers stating that the items are “unregulated and can be highly dangerous.”

According to the newest report, SEBI has proposed rewording the warning. The new warning should add that crypto products are unregulated, and significant public personalities such as celebrities, athletes, etc., should not act in them or use their voices to advertise them.

The new rules are meant to bring attention to the potential crypto risks & worries about fraud. They also place the burden on the celebrity or athlete making the endorsement.

The SEBI recommendation makes the celebrities responsible if they break the Consumer Protection Act or other laws. So, the updated disclaimer would also say that “dealing in crypto products may lead to litigation for possible violations of Indian laws like FEMA, BUDS Act, PMLA, etc.”

The Consumer Protection Act of 2019 allows for fines imposed on endorsers who “mislead customers.”

However, according to the article, if the celebrity has exercised due diligence to check the accuracy of claims made in the ad about the product or service, they will not be held liable.

Indian legislation and global developments

The news in India also comes as actor Matt Damon is being chastised for pushing digital assets as the market continues to decline.

Damon and teamed up earlier this year to boost the platform’s promotional efforts. However, the former is now being ridiculed for his “fortune favors the brave” ad encouraging others to invest in the asset class.

Meanwhile, SEBI has approached the government about extending its authority over social media platforms as well.

According a Economic Times report, the Securities and Exchange Commission wants to “monitor and decode data” on platforms like WhatsApp and Telegram to prevent insider trading and follow trading channels for crypto and other assets.

Additionally, according to the report, the Consumer Affairs Ministry is scheduled to unveil updated crypto advertising guidelines under the Consumer Protection Act.