In response to a complaint regarding cryptocurrency ads, the Delhi High Court issued a notice requiring streamlined disclaimers.
The Central government, the Securities and Exchange Board of India (SEBI), and cryptocurrency exchanges have all been served with notice by a bench led by Chief Justice DN Patel and Justice Jyoti Singh.
The petitioners, Ayush Shukla and Vikash Kumar (Practising Lawyers), asked SEBI to issue guidelines mandating that disclaimer text cover 80% of the screen, with a voiceover read slowly and not speed-read, lasting five full seconds, when used in conjunction with audio-visual advertisements run by crypto-asset exchanges.
According to the petition, M/s Wazir X, M/s CoinDCX, and M/s Coinswitch Kuber are made parties in the matter because they are established crypto-exchanges currently operating within the Indian territory that run advertisements enticing and drawing retail investors to trade, invest in cryptocurrencies and crypto-assets.
According to the petition, crypto assets are inherently riskier and more volatile investment products than standard stock market shares.
Since 2010, there have been guidelines in place for advertisements for mutual fund products that run on audio-visual media. As a result, the petitioners argue that equivalent guidelines for crypto exchanges are urgently needed.
The petitioners also claim that the disclaimer text, which reads, “Cryptocurrency is an unregulated digital currency, not a legal tender, and subject to market risks,” is not in a legible font, does not include voice iteration for more than or at least 5 seconds, and the line of text is smaller than the standard size, displaying for less than two seconds.
It is argued that a properly placed and sized warning will instil the wisdom of investigating risk profiles around crypto-assets before uninformed investors invest their hard-earned money in digital assets they don’t comprehend.