New Delhi: On a petition seeking a route to take proper measures and issue clear procedures against crypto-asset exchanges in India marketing on national tv without sufficient standardized declarations, the Delhi High Court issued a notice to the Centre, SEBI (Securities and Exchange Board of India), and others on Wednesday.
Justice DN Patel and Justice Jyoti Singh of the Division Bench on Wednesday asked replies from the Ministry of Information and Broadcasting, SEBI, M/s Wazir X, M/s CoinDCX, and M/s Coinswitch Kuber, and adjourned the case till August.
Ayush Shukla and Vikash Kumar (Practising Lawyers) petitioned SEBI to create rules requiring warning words to fill 80% of the screen, with a voiceover read slowly rather than speed-read, lasting five full seconds, in audio-visual ads aired by trading platforms.
The lawsuit claims that M/s Wazir X, M/s CoinDCX, and M/s Coinswitch Kuber are made parties in the issue because these companies are actively involved and run ads tempting and attracting retail investors to trade and invest in cryptocurrencies and crypto-assets within the Indian territory.
Crypto-assets are intrinsically riskier than traditional equity investment products in the stock market, mutual funds, and all other types of financial instruments that offer investment options, according to the plea.
It was stated that as of now, audio-visual commercials operated by businesses in the industry have a bit of text relatively small than that of the standard size (minimum 10 font size) stating something along the lines of “Cryptocurrency is an unregulated digital currency, not a legal tender, and subject to market risks.” It also stated that there really is no audio and also that the message showcased in successful marketing is less than two seconds, regardless of the fact that this is an unlikely assessment that audiences will make while watching the advertisement due to the placement of the text on the screen, the size of the text, and the duration of the text (being less than even two seconds in numerous advertisements and in all advertisements being less than five seconds).
The petition stated that crypto-assets should be treated similarly to mutual funds, if not more so, to safeguard market participants who really are unaware of the particular features of virtual currency and their credit risk, especially considering the fact that they are strongly reliant on market behavior and frequently spike when certain crypto-world celebrities make broad affirmations.
The plea stated “An ordinary retail investor who views the audio-visual advertisement on television run by the firms involved on a regular basis, as well as on online websites like Youtube, may suffer immense losses as a result of thereof whilst on the other hand; having a disclaimer on screen after the end of the advertisement with voice over in English and Hindi (as may be appropriate) and correct placing and at least 80 per cent coverage in terms of the size on the screen to be viewable and readable by the investor, may instil wisdom of researching and reading up on the risk profiles surrounding crypto-assets prior to investing his hard-earned money in digital assets not understood by him,”