Crypto Crash: Will it fade the shine of star backers?
Cryptocurrency brands and exchanges are going through their worst phase yet.
Popular exchange CoinDCX last year signed popular young actors Ayushmann Khurana and Disha Patani as the face of its ‘Future Yahi Hain’ campaign. CoinSwitch Kuber had roped in top star Ranveer Singh for their #KuchTohBadlega commercials.
An estimated 15-20 million retail investors in India joined the crypto bandwagon last year amid a record-setting bull run in the market and aggressive customer acquisition campaigns by well-funded crypto trading platforms.
Indian crypto trading exchange “Bitbns” roped in five celebrities – Alok Nath, Anup Jalota, Shivaji Satam, Archana Puran Singh and Sreesanth – associated with various fields of comedy, music, drama and cricket – to reach people across all genres .
From July 2022, the scene has changed completely. All major stock exchanges are witnessing intensive selling amid tax rules (1 per cent TDS, 30 per cent on gains), high inflation (over 7 per cent) and regulatory uncertainty. Leading players including CoinDx, CoinSwitch and Bitbns have imposed a curb on withdrawals citing regulatory issues, leaving hundreds of thousands of investors panicking.
In addition, they are being investigated by the Enforcement Directorate (ED) for the alleged violation of the Foreign Exchange Management Act (FEMA), further adding to the stress level of the investors. ZebPay and WazirX faced an ED probe last year.
Cryptocurrencies are also in trouble. Salman Khan-backed GARI has fallen by more than 80 percent in the last six months. GARI, launched by homegrown card video app Chingari, went live on 12 crypto exchanges in January alone.
Bitcoin’s price fell by 70 percent, Ethereum’s price by 48 percent and Luna has lost almost all its value since November 2021. They were supported by global tycoons such as Bill Gates, Mark Zuckerberg and Sir Richard Branson.
Cryptocurrency markets worldwide have crashed with billions of dollars wiped out, taking the total market capitalization of cryptocurrencies below $1 trillion in just one year from $3 trillion in 2021, according to a Forbes report.
The average daily transaction volume on WazirX, CoinDCX, BitBNS and Zebpay fell to $5.6 million by the first week of July from $10 million at the end of June, reports say. Trading volumes on BitBNS and CoinDCX crypto exchanges fell to ⅓ and 90 percent, respectively.
“The chaos forces Indian investors into a selling round. I wish I hadn’t fallen for the reckless promotions of my favorite actors and cricketers, says a young IT engineer, who had lost his entire savings to crypto markets.
Great lesson for investors
Crypto brands have used celebrity power to target the pulse of the youth and penetrate deeper into the country. Apart from movie stars and cricketers, an army of big and micro influencers have also been pushing crypto brands since last year. Based on glowing advertisements from celebrities and reviews from social media influencers, several millennial investors invested small to large sums in cryptocurrencies.
The development is a big lesson for investors, who fell for glittery crypto advertising from popular actors and celebrities last year. This also raises questions about the advertising blitzkrieg from the brands.
“While most of the celebrity ads play up the celebrities’ star power and talk about the benefits of investing in cryptocurrencies, they don’t have adequate warnings for investors about the risks and volatility of these instruments,” says Lloyd Mathias, business strategist and Angel. Investor,
Shradha Agarwal, CEO and co-founder of Grapes says, “Since celebrities have a promising mass appeal, endorsing such ads comes with a lot of responsibility. Considering crypto is a very new concept, it’s important that celebrities mention the risks associated with the sector .As consumers invest enormous faith and follow celebrities blindly, they are required to have knowledge of the industry before marketing it so as not to mislead consumers.”
Crypto brands have unanimously halted their advertising activity following recent guidelines issued by ad regulators, and the sector has significantly curbed its ad spend, she said.
Sourodeep Banerjee, Associate Creative Director, The Rabbit Hole (Zoo Media), has a different point of view.
“I think we’ve seen some pretty fun campaigns coming out of India, with CoinDcx’s ‘Bitcoin Liya Kya’ being my absolute favorite in the category. With the new guidelines, I think advertising for anything crypto needs to be smarter and more aggressive. All who know anything about crypto and other virtual digital assets are aware of the volatility, so these disclaimers will not discourage the potential crypto investor, but rather increase the risk factor, says Banerjee.
He adds, “But not being able to use words like currency and securities will definitely be a thorn in the side of advertisers in the future.”
For now, the crypto market is volatile, especially after the new regulations. Along with the prices of cryptocurrencies, we have seen a drop in marketing efforts. That shouldn’t be the case. I think spreading awareness and educating people should be the way to go for crypto brands. This is the time to create a positive environment in the market,” advises Shrenik Gandhi, Co-Founder and CEO, White Rivers Media.
Regulations came as a deterrent
There was no law in place until a month ago that prohibited celebrities from endorsing products that are volatile in nature. The Union government recently amended rules to make misleading advertising a criminal offence.
The Advertising Standards Council of India (ASCI) also drafted guidelines for advertising virtual digital assets (VDA), often referred to as crypto or non-fungible tokens (NFT), which mandates placing a disclaimer next to the ad or influencer – the post: “Crypto products and NFTs are unregulated and can be very risky. There can be no regulatory recourse for losses from such transactions… This must be carried out prominently and unavoidably in promotions for products and services.”
Dr Sandeep Goyal, MD of Rediffusion, says: “Celebrities endorsing crypto have stopped making such ads since ASCI and then the Consumer Affairs Ministry issued new guidelines on misleading ads early this year. Even if they endorsing crypto in the future, they will have to due diligence or they will face legal consequences.”
Does the chaos affect celebrity brand equity?
Dr Goyal dismisses suggestions that the decline in cryptos will affect the brand value of backers.
In India, celebrities are not held accountable for the products they endorse unless the products directly affect the physical health of people, says Banerjee.
Banerjee points out, “Amitabh Bachchan and Akshay Kumar have faced huge backlash over the products they have endorsed with negligible hits to their stardom. And Sachin is still saying ‘Mutual Fund Sahi hai’ even though the Sensex has bottomed quite a bit.”
Banerjee says it would be interesting to see how Indian celebrities leverage NFTs.
“Sunil Gavaskar, Salman Khan and the KGF series have had decent success in this area. And even owning iconic cricket moments on Fanmania which claims to be an officially licensed cricket NFT collection has seen the likes of Rohit Sharma and Hardik Pandya endorsed it on TV. So celebrities are confident that their stardom is not going to be affected in the long run by associating with web 3.0 in any form,” he explains.
Crypto Brands Confident
Despite huge challenges, Indian cryptocurrency companies are confident of early revival. WazirX and ZebPay recently published a trader sentiment survey to highlight how further reforms will advance the industry and its participants.
According to their survey of traders, 27% of respondents had already sold 50% of their portfolio before April 1, 2022. Over 83% of traders believed that the recent tax measure had deterred their trading frequency.
A CoinSwitch Kuber spokesperson told e4m: “When markets go through a bear phase, as is the case now, belts need to be tightened. The crypto sector is no different. Companies will reassess budgets and spending, and that’s pretty clear now.”
He added: “But this is the best time to dig in and build. It’s also a very good time to effectively use various communication channels to raise awareness and educate customers/users about crypto so that they are better informed in the choices they make.” tar. DYOR has been central to CSK’s advertising and communications, and we will continue to do so.”
Read More News About (Ad News, Latest Advertising News India, Internet Advertising, Ad Agency Updates, Media Advertising India)
For more updates, stay socially connected with us at
Instagram, LinkedIn,
TwitterFacebook and Youtube
