Delhi High Court Issues Notice On Plea For Guidelines Against Crypto-Currency Exchanges Advertisements On Televisions Without Standardized Disclaimers

The Delhi High Court has issued notice on plea seeking issuance of guidelines or rules to be framed against the crypto currency exchanges in India advertising on televisions without adequate standardized disclaimers.

A division bench comprising of Chief Justice DN Patel and Justice Jyoti Singh issued notice in the plea after hearing Advocate Aayush Shukla appearing as petitioner in person.

The plea moved Advocates Aayush Shukla and Vikash Kumar further seeks appropriate guidelines/ circular/ rules mandating the disclaimer text to cover 80% of the television screen while advertising, with a slow voice over read in place of a speed-read lasting duration of five seconds.

The plea makes three established crypto-exchanges as respondents functioning within territory of India running advertisements regarding investments pertaining to crypto-currencies and crypto-asset. Furthermore, the plea also makes SEBI and Secretary, Ministry of Information and Broadcasting, Government of India as respondents.

Stating that it has been the norm for companies offering mutual funds products to adhere to standardized guidelines and rules put in place in advertisements run through audio-visual media qua mutual funds investments, the plea states that Crypto-assets must be given the same treatment as mutual funds in order to protect the retail investors "who are not aware of the inherent characteristics of crypto-assets."

"An ordinary retail investor who views the audio- visual advertisement on television run by the Respondents No. 1-3 on a regular basis, as well as on online websites like Youtube, may suffer immense losses as a result 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% coverage in terms of the size on screen to be viewable and readable by the investor, may instill a 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." The plea reads.

During the course of hearing, Advocate Neeraj Malhotra appearing on behalf of SEBI submitted before the Court that the Reserve Bank of India being the regulator of financial market should have been made a respondent in the matter in place of the SEBI.

Calling the writ petition completely misconceived, Malhotra submitted before the Court that the SEBI deals only with the securities market and is not required to be made a party.

"Another petition is already pending before the Supreme Court in which the issue regarding regulation of crypto currency is pending. The SGI had made a statement there that the bill has been tabled in Parliament regarding banning and regulation of digital money." Malhotra submitted while praying for the Court to dismiss the plea.

The plea seeks the following prayers:

- To issue a writ, orders or direction in the nature of mandamus directing the Respondent No. 4 to take effective steps and issue appropriate guidelines/ circulars/ notices/ rules against crypto-asset exchanges in India advertising on national television without adequate standardized disclaimers.

- To issue a writ, orders or direction in the nature of mandamus directing the Respondent No. 4 to take effective steps and issue appropriate guidelines/ circulars/ notices/ rules mandating that disclaimer text cover 80% of the screen, with voice over read in a slow manner and not speed-read, lasting duration of five whole seconds, against audio – visual advertisements run by crypto-asset exchanges.

- To issue a writ, orders or direction in the nature of mandamus directing the Respondent No. 5 to issue show cause notices to the Respondents No. 1 –3 and further issue order or direction preventing any future audio-visual advertisement from being run on national television by Respondents No. 1 -3 till the time that Respondent No. 4 issues appropriate guidelines/ circulars/ notices against crypto-asset exchanges advertisements on national television in India.