Crypto endorsement by celebrities in India will soon come to an end with possible talks of law violations. The deals will come to a halt for all major public figures and sportspeople even, suggests SEBI. Along with India, the novel crypto space is highly unregulated in several markets calling for strict rules.
Misleading ads are a violation
The buzz started in the USA before making its way to India. Two influential celebrities had misled investors about uneducated crypto for which they faced multiple lawsuits. Following the fiasco, the immediate question arose. Are Indian celebrities at similar risk? The use of voice from any of the popular figures is not acceptable either for advertisements/endorsements. involving crypto, SEBI made it clear in their response. If the celebrity involved fails to comply with the law, it might lead to a possible violation of the Consumer protection act. Additionally, there is a risk of prosecution for possible violation of other laws including FEMA, BUDS Act, PMLA, etc.
Will violations be penalized?
Celebrities from all fields are highly influential in India. Every statement or claim they make can swing in either direction. This remains true in the very volatile space of cryptocurrency. Because crypto remains unregulated, leaves no room for negligence in this delicate matter. A first-time celebrity violator may be penalized up to ₹10 lakh by the CCPA on account of false claims or even misleading ads. A repeated violation can escalate the fine to a further ₹50 lakh and even lay a ban of up to 3 years for any other products.
“The Finance Ministry has also asked the regulator to give its views on advertisement and also forwarded guidelines by Advertising Standards Council of India (ASCI)”, sources of the Hindu Business Line added. A final decision to bring out a clear set of guidelines to prevent misleading ads under the protection act might roll out soon.
Clarity on crypto taxation
The securities and exchange board of India, SEBI, has recommended if not completely banned celebrity-crypto endorsements. There are no certain regulations governing cryptocurrencies and their usage in India. This calls for the anti-celebrity endorsement rule. The uncertainty around crypto law has been around for a long time.
The categorization of crypto as Virtual digital assets, VDA has been purely for taxational reasons.
“As per the provisions of the proposed section 115BBH to the Income-tax Act, 1961, loss from the transfer of VDA will not be allowed to set off against the income arising from transfer of another VDA,” junior minister for finance Pankaj Chaudhary had said in the parliament.
Additionally, he mentioned that the infrastructure costs incurred in the mining of VDAs will not be considered as cost of acquisition, being capital expenditure in nature, and hence not deductible in arriving at the gains made.
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