Last month, members of the Parliamentary Standing Committee on Finance questioned officials about several aspects of crypto. According to sources, the Securities and Exchange Board of India (SEBI), has provided the sought material and stated its position clearly. The regulator has now provided a detailed written response. According to sources, the Finance Ministry has also requested the regulator for its thoughts on ads and has provided guidelines from the Advertising Standards Council of India (ASCI) on crypto sponsorship ads. With probable criminal infractions, celebrity sponsorship of crypto in India would soon come to a stop. SEBI stated that all significant public personalities, including athletes, should stop signing partnership deals with crypto firms. Strong regulations are required because the crypto industry in India is currently uncontrolled, necessitating strict regulations.
SEBI, India’s securities and exchange board, has suggested, if not outright prohibited, celebrity crypto ads. The anti-celebrity ad regulation is required. In India, celebrities have enormous power as they can easily manipulate their fans as every remark or assertion they make has the potential to go either way. The celebrity is especially dangerous when it comes to the volatile crypto market. SEBI’s response cited the source:
“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.”
It is further said that any significant public person who makes an ad in contravention of the Consumer Protection Act or any other legislation will be held accountable. There is also the possibility of prosecution for suspected violations of other laws such as the Foreign Exchange Management Act (FEMA), the Banning of Unregulated Deposit Scheme Act (BUDS Act), the Prevention of Money Laundering Act (PMLA), and others.
The Central Consumer Protection Authority (CCPA) can fine a first-time celebrity violation up to 10 lakh for fraudulent statements or even deceptive advertisements. Repeated violations can result in a fine of up to ₹50 lakh and a three-year ban from selling any other items.
The classification of crypto as virtual digital assets, or VDA, was made only for tax purposes. Minister for Finance Pankaj Chaudhary stated in Parliament:
“As per the provisions of the proposed section 115BBH to the Income-tax Act, 1961, loss from the transfer of a VDA will not be allowed to set off against the income arising from transfer of another VDA.”
Furthermore, he stated that the infrastructure costs involved in the mining of VDAs would not be considered a cost of acquisition because they are capital expenditures and hence not deductible in calculating the gains gained.
