India’s SEBI proposes prohibiting celebrity digital currency endorsement

The Securities and Exchange Board of India (SEBI) has suggested that the country modify its advertising guidelines for digital assets and services. SEBI proposed that public figures, including celebrities and athletes, should be banned from endorsing digital currency products and services.

Hindu Business Line reports that SEBI made the proposal in response to a call for comments on the recently unveiled guidelines for digital currency advertising released by the Advertising Standards Council of India (ASCI).

The ASCI guideline, which went into force on April 1, dictates that celebrities who endorse digital assets, products, or services should perform due diligence in understanding their statements. However, SEBI is looking to change this radically. In correspondence to the Parliamentary Standing Committee on Finance, SEBI wrote that: “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.”

The securities and commodity market regulator added that the penalty for flaunting the proposed rule would lead to prosecution. It also proposed that the ASCI guideline’s disclaimer for advertisers should be reworded. It suggested the wording to be:

“Dealings in crypto products may lead to prosecution for possible violation of Indian laws such as FEMA, BUDS Act, PMLA, etc.”

SEBI notes that the proposal is in line with requirements in India’s Consumer Protection Act of 2019.

India tightening digital currency regulations

The government of India has often expressed that digital currencies are a threat to the country’s economy. To mitigate this perceived threat, the government has introduced multiple regulations for the industry.

Aside from the ASCI advertising guidelines, a few other recently introduced regulations include an order for digital currency exchanges to store user information for at least five years and the introduction of a 30% tax on digital currency gains.

Despite these already established requirements, a lot of uncertainty still exists in the digital currency industry. This is because there is yet to be a fully comprehensive regulatory framework for digital assets. Fears also exist that India could ban digital assets.

The uncertainty has so far been greatly affecting digital currency firms and investors. According to a Reuters report, several digital currency exchanges saw their trading volume drop significantly after the tax law came into effect. There was also investor outcry after exchanges stopped accepting deposits through local onramps due to regulations.

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