Cryptos & NFTs – ASCI Compliances: Dos And Don'ts

Agama Law Associates


ALA is a boutique commercial law practice offering end-to-end corporate-commercial legal solutions to Indian and foreign businesses. We offer a wide range of services tailored across sectors for private clients, startups and mature businesses. We have a cost-effective technology based model supported by a large network of associates. Commercial transactions and advisory is our forte, which includes contract management and standardization. Our disputes profile is advising and strategizing from a pre-dispute stage, and managing and driving the litigation across all courts and tribunals including the High Court, the NCLT and SAT
Virtual digital assets ("VDA/s") such as cryptocurrencies and Non-Fungible Tokens ("NFT/s") and services related thereto, form part of a trend that currently floods the internet.
India Technology
To print this article, all you need is to be registered or login on


Virtual digital assets ("VDA/s") such as cryptocurrencies and Non-Fungible Tokens ("NFT/s") and services related thereto, form part of a trend that currently floods the internet. Doubling last year's figures, a recent report by Deloitte Global estimates that in 2022, NFTs for sports-media will generate more than US$ 2 billion in transactions.

The said report also records that given India's regulatory framework and pending policies, it is only a matter of time before NFT-based market for movies and sports-memorabilia become a nation-wide reality.1 Already, a few prominent Indian personalities have declared their entry into the realm of NFTs.

However, while emphasising the highs, the rosy-picture painted by such advertisements belie the volatility and risks associated with NFTs. Consequently, in order to protect the interests of consumers, the Advertising Standards Council of India ("ASCI") is now prohibiting advertisements from claiming that investing in VDAs is so simple that the consumers won't falter.

Recent Developments

On 23rd February 2022, ASCI published the ' Guidelines for advertising of Virtual Digital Assets and Linked Services' ("the Guidelines"). Applicable to all VDA related advertisements released or published on or after 1st April 2022, the Guidelines offer a 15 day grace period within which advertisers and media owners must ensure that those commercials in non-conformance with the Guidelines are not aired.

Additionally, to protect new or uninformed users from being misled by advertisers, the Guidelines circumscribe - how, where, when, how long, and in what format disclaimers to advertisements are to be placed. Some key features that summarize these various dos and don'ts are as follows:

  1. ASCI Dos and Don'ts for Cryptos and NFTs2
  1. No advertisement may claim that VDA products or trading may resolve financial issues.
  1. Every advertisement must include the name of the advertiser (phone and e-mail) and an easy way to contact them.
  1. Advertisements should not be presented in a way that exploits a consumer's lack of understanding or violates their trust.
  1. Usage of words like "currency", "securities", "custodian", and "depositories" is prohibited in VDA advertisements.
  1. Product cost/profitability advertisements on VDA should contain accurate and up-to-date information.
  1. No minor must appear in a VDA commercial directly dealing with or discussing the said product.
  1. No statement in such advertisement shall promise or guarantee a rise in revenues in the future.
  1. No other regulated asset class can be compared to VDA products.
  1. Guidelines on High-Risk Disclaimer
  1. All ads for VDA products and VDA exchanges, or featuring VDAs, must carry the following disclaimer. "Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions."
  1. The disclaimer must be made in the following manner so that it is PROMINENT and UNMISSABLE by an average consumer.
  1. In print, the disclaimer should take up 1/5th of the ad space at the bottom and be presented in a legible typeface.
  1. There should be a text disclaimer as well as a voiceover at the beginning and end of videos. The disclaimer must be visible for at least five seconds on the screen.
  1. The disclaimer should be at the end of the audio recording, and the voiceover should not be rushed. The disclaimer should be repeated at the start and finish if the audio recording is longer than ninety seconds.
  1. In social media posts, a disclaimer should be included in the description as well as any image or video files attached. In case of disappearing stories/posts, the disclaimer should be voiced at the end of such post/story.
  1. The disclaimer must be in the advertisement's dominant language.

Due-diligence by Celebrities and Prominent Personalities

Since many buyers may not purchase VDAs for quick returns, but because of endorsement from prominent personalities, ASCI has warned celebrities to carry out "due diligence" with respect to the statements or claims made in the advertisements featuring them.

Reportedly, the Secretary-General of ASCI Ms. Manisha Kapoor said that "we have seen a spate of advertising for virtual digital assets which could compromise consumer interest in the absence of some guardrails. Use of celebrities and high decibel advertising would attract consumers to these offerings without full disclosure of the risks....Given that this is, as of now, an unregulated space; it is even more important for advertising to be upfront regarding the risks associated with these products. Globally, this is an emerging technology and products in the virtual digital asset industry have seen significant volatility. We believe with these guidelines, advertisements would be fairer and more transparent".3

Accordingly, since crypto products and NFTs are currently new, untested, extremely volatile and unregulated, considerable amount of expertise and technical know-how would be required in order to temper the unreasonable expectations of returns that buyers may have.

It is also important to remember that the Guidelines were invented to prevent misleading advertisements from downplaying the risks associated with investments in crypto products or NFTs, and therefore they are not backed by industry-endorsement, government policy, or any other formal recognition in law.

Non-Compliance – Penalties and Consequences

Although ASCI is a self-regulatory and non-statutory organisation whose recommendations are not legally binding in the strictest sense, courts and tribunals in India have followed the ASCI Code on several occasions. In addition to action taken under the ASCI Code and Guidelines, the penalty prescribed for misleading advertisements under the Consumer Protection Act, 2019 is a sentence of maximum 2 years in prison, or a fine upto Rs.10 lakhs, or both.4 Accordingly, Indian courts and tribunals are more likely to find advertisements in dissonance with the Guidelines as harmful to the interests of consumers.

Way Forward

Despite the fact that NFTs are becoming more popular, the regulation surrounding them is unclear. Whereas, some countries regulate NFTs on the basis of their usage, the majority of the countries at present including the US and the UK have no regulatory framework.

This comes as a major cause for concern because without a strong regulatory framework in an ever-expanding global market, there is a growing risk of illicit actions including tax evasion, money laundering, terrorist financing, fraud, and theft.

In India, while no legal framework that governs VDAs exists as of today, the introduction of the 'Cryptocurrency and Regulation of Official Digital Currency Bill, 2021' in the Lok Sabha may be on the horizon. As a result, the ASCI Guidelines will serve as a helping hand in India's efforts to self-regulate and monitor VDAs, as well as to establish a level of discipline in this unregulated market.


1 Deloitte, 'Technology, Media, and Telecommunications Predictions 2022', Deloitte, 22nd February, 2022, viewed 20th March, 2022, <<a href="">>

2 Advertising Standards Council of India (ASCI), 'Guidelines for advertising of Virtual Digital Assets and linked services', ASCI Online, 23rd February, 2022, viewed 12th March, 2022,<<a href="">>

3 Money Control, Priyanka Iyer, 'Crypto, NFT advertisements: New ASCI guidelines mandate 'highly risky' disclaimer', Money Control, 23rd February, 2022, viewed 12th March 2022, <<a href="">>

4 The Consumer Protection Act, 2019, § 89.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More