Madras High Court Recognises Cryptocurrency as Property Under Indian Law

Legal Context

Madras High Court Recognises Cryptocurrency as Property Under Indian Law: In a landmark judgment, the Madras High Court held that cryptocurrencies qualify as property capable of ownership, enjoyment, and being held in trust under Indian law. The court clarified that although intangible, cryptocurrency fulfils key features of property such as transferability and exclusive control.

The ruling emerged from the case Rhutikumari v. Zanmai Labs Pvt. Ltd., involving the crypto exchange WazirX, where an investor’s 3,532.30 XRP coins were frozen following a major cyberattack in 2024. The Court ruled that these coins were distinct from stolen tokens and that the investor’s asset rights deserved protection.

What Key Legal Findings Mean

Classification as Property

The Court stated: “There can be no doubt that cryptocurrency is a property. It is not a tangible property nor a currency. However, it is a property which is capable of being enjoyed and possessed and can be held in trust.” The ruling drew from international precedents such as Ruscoe v. Cryptopia Ltd (New Zealand, 2020), which treated digital tokens as intangible property.

Recognition under Indian Law

The Court noted that under Section 2(47A) of the Income Tax Act, 1961, cryptocurrencies are defined as Virtual Digital Assets (VDA). It also clarified that these assets are not treated as speculative transactions under the Act. The Court reaffirmed earlier Supreme Court principles regarding the nature of property and held that they apply equally to cryptocurrencies.

Jurisdiction and Investor Protection

The exchange had argued that arbitration seated in Singapore barred Indian relief. However, the Court asserted Indian jurisdiction due to the transaction’s connection to India. It directed the exchange to furnish a bank guarantee or escrow deposit to protect the investor’s holdings pending arbitration. This move aims to secure investor rights in cases of digital asset disputes.

Implications for Stakeholders

This ruling offers stronger legal footing for crypto holders in India, allowing them to claim their assets as property rather than mere contractual rights. It strengthens investor protection by enabling traditional property remedies such as injunctions and trust-based claims. The decision also signals to policymakers the urgent need to align asset classification, taxation, and regulation.

For crypto exchanges, the judgment increases accountability over custodial practices and user funds. For tax authorities, the recognition of cryptocurrency as property may influence taxation, inheritance, and compliance frameworks. Although regulatory clarity remains pending, this judgment bridges a significant gap in India’s crypto jurisprudence.

Static GK Tip:

Under Indian jurisprudence, “property” extends beyond physical things to every species of valuable right and interest (as held in Jilubhai Nanbhai Khachar vs. State of Gujarat).

What Lies Ahead

Key next steps include establishing legislative guidelines on Virtual Digital Assets, addressing insolvency and trust-related issues, and formulating clear taxation policies. As India balances innovation with financial stability, this ruling may pave the way for a more defined crypto regulatory regime.

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Madras High Court Recognises Cryptocurrency as Property Under Indian Law: