Warning bell over crypto promotions

Cryptocurrency exchanges, which are into brand endorsements in the midst of an uncertain future for the industry, have drawn the attention of regulators and tax authorities. According to regulatory sources, the brand promotion could mislead retail investors as the legality of cryptocurrency itself is under the scrutiny of the central government.

“These exchanges are self-regulated and do not come under any regulator or authority. They trade in crypto variants including bitcoin with no legal sanctity. In the absence of a definition and framework, terming and selling it as a digital asset could be very risky for investors,” said a regulatory official.

According to him, the deliberations over the crypto framework is still in the works. The concerned ministries and regulators are talking to stakeholders on whether to regulate or to put a complete ban on it, the official said. A government constituted panel has received suggestions and feedback and those are being evaluated. Issues such as beneficial ownership and who to be held accountable in case of loss have been reviewed, according to a source in the government.

Also, the government is taking cues from other countries on treating crypto. Exchange platforms including Coinswitch Kuber and COINDCX have been promoting crypto variants like bitcoin as a digital asset, and they ask investors to start trading in bitcoin with a minimum investment of Rs 100. One of the promo lines is ‘trade karo befikar’. These advertisements typically come with disclaimers in small font saying cryptocurrency is an unregulated digital currency, it’s not a legal tender and that it is subject to market risk.