In India, cryptocurrencies are being marketed like hair oil, shampoo, and soap.
Over the last year, several cryptocurrency exchanges in India have tied up with celebrities from social media, sports, and Bollywood to market cryptocurrency investments on the internet. These campaigns, which have mostly been run by local cryptocurrency exchanges like CoinDCX and CoinSwitch Kuber, often have celebrities talking about financial literacy and encouraging youngsters to invest in the alternative asset class. At times, these promotions go a step further and offer coupons that can be exchanged for cryptocurrencies.
Some of the celebrities who have promoted cryptocurrencies on Instagram, YouTube, and Twitter include standup comics Tanmay Bhat, Samay Raina, and Aishwarya Mohanraj, Bollywood actors Radhika Apte, Kunaal Roy Kapur, and Manoj Bajpayee, YouTube sensation Ashish Chanchlani, internet content creators Kusha Kapila and Dolly Singh, vlogger Vishnu Kaushal, TV host Danish Sait, cricketers Ishant Sharma and Dinesh Karthik, and poet Priya Malik.
“Social media acts as a way to trust the company. In India, the industry isn’t regulated yet. The trust factor is important,” Nischal Shetty, founder of Mumbai-headquartered exchange WazirX had told The Economic Times in December. “Back in 2017, there were a lot of crypto scams and we didn’t have a crypto community. Today, no one will trust a brand-new website if no one within the online community is talking about it.”
Tanmay Bhat to Radhika Apte: The cryptocurrency promotion posts
In April, Bengaluru-based crypto exchange CoinSwitch Kuber launched its campaign #makeaswitch and #tradeKarBefikar, aimed at young and tech-savvy Indians. Kapur, Bajpayee, and Sait have collaborated with CoinSwitch Kuber for endorsements.
Similarly, one of India’s largest cryptocurrency exchanges CoinDCX launched a digital campaign #BitcoinLiyaKya to bring new users onboard. The platform incentivised new users with free bitcoin worth Rs100 ($1.35) through a voucher code and said a few winners would be given a prize of 1 bitcoin, which was worth around Rs32 lakh today (Aug. 9).
The trend of distributing free cryptocurrencies has become so prevalent that it is now triggering memes.
Content and comedy aside, such promotion could prove to be very risky for the exchanges as well as the celebrities.
The problem with promoting bitcoins and other cryptocurrencies in India
Though India has lagged many western nations in terms of cryptocurrency popularity, the asset class has become quite popular in the country in recent months. Indians had parked nearly $6.6 billion (Rs49,189 crore) in cryptocurrencies until May this year, as compared to around just $923 million until April 2020. Currently, the country ranks 11 out of 154 nations (pdf) in terms of cryptocurrency adoption, as per blockchain data firm Chainalysis.
These marketing campaigns are a way for exchanges to drum up their business even further. However, most of these promotional videos don’t disclose the risks associated with investing in cryptocurrencies. In addition, many of these internet celebrities have very young followers, which makes these ads even riskier.
Cryptocurrencies may be the future, but it is not a meaningful part of the present for many people in the country, said Harish Bijoor, brand strategy expert and founder of Harish Bijoor Consults Inc. “Until the regulation is sorted, social media influencers must stay wary and even steer clear of participation. The influencer must influence on the basis of clear guidance and path. Not an iffy one,” Bijoor said.
Promoting cryptocurrencies without any regulatory scrutiny can land celebrities in trouble because not all exchanges are safe and reliable. In 2018, the founder of Pune-based crypto company GainBitcon had been arrested for allegedly duping more than 8,000 people of Rs2,000 crore.
In July, advocates Ayush Shukla and Vikash Kumar filed a plea in Delhi High Court arguing that risk disclaimer text on such ads should cover 80% of the screen to warn viewers appropriately.
So far, there are no regulations around cryptocurrency advertising in India. Industry body Blockchain and Crypto Assets Council is set to release self-regulatory guidelines on advertising for such companies in the future.
Meanwhile, there are reasons why the trend of crypto advertising on social media may pick pace going forward.
Google’s advertising rules for cryptocurrencies
After banning cryptocurrency ads in March, the world’s largest ad network Google eased its advertising regulations for cryptocurrency exchanges registered with the US financial authorities and wallets from Aug. 4. This means, American crypto exchanges will be able to advertise more freely on Google, and that could prove to be a threat to their Indian rivals.
It doesn’t help that India does not have any laws to protect investors, which makes those who are putting their money into the market via local players at high risk.
Many Indian investors are already considering a switch to foreign exchanges for better features and due to technical glitches in operations on domestic ones.