Madras High Court Declares Cryptocurrency as Property: A Game-Changer for India's Digital Asset Ownership and Investor Rights

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The Madras High Court has made a landmark ruling by recognizing cryptocurrency as "property" under Indian law, providing legal protection to digital assets for the first time in a judicial decision. This came in a case where an investor's XRP holdings on the WazirX exchange were frozen after a 2024 cyberattack, allowing the court to grant interim relief and assert jurisdiction over such assets. The decision boosts investor confidence in a market where crypto is already taxed as virtual digital assets, but lacks full regulatory clarity, amid growing adoption in India with over 100 million users.

Key Points

1. The Madras High Court, in its October 25, 2025 order by Justice N. Anand Venkatesh, ruled in the case of Rhutikumari vs Zanmai Labs Pvt Ltd (WazirX's Indian entity) that cryptocurrency qualifies as property capable of ownership, transfer, and trust.
2. The petitioner sought protection for her 3,532.30 XRP tokens, arguing they were separate from the stolen Ethereum in the July 2024 hack that caused $230 million losses, and the court directed WazirX to deposit Rs 9.56 lakh in escrow or provide a bank guarantee until arbitration concludes.
3. The ruling draws on precedents from the UK, Singapore, and New Zealand, classifying crypto as intangible property under Indian law, distinct from currency or mere information, and invokes Section 2(47A) of the Income Tax Act for virtual digital assets (VDAs).
4. Crypto exchanges like WazirX hold user assets in fiduciary trust, owing duties of care, and foreign insolvency proceedings (WazirX's Singapore arbitration) cannot override Indian users' rights without court approval.
5. India taxes crypto gains at 30% with 1% TDS since the 2022 Finance Act, but lacks a dedicated law; this judgment fills a gap by enabling property-based remedies like injunctions and guarantees.
6. The decision has sparked optimism among investors affected by the WazirX hack, potentially paving the way for class-action suits and stronger FIU oversight on exchanges.
7. Globally, similar recognitions exist, but India's move aligns it with progressive jurisdictions while highlighting the need for comprehensive regulation to balance innovation and consumer safety.

Explained

What is cryptocurrency, and why does classifying it as property matter in India?

Basic Concept of Cryptocurrency: Cryptocurrency is a digital or virtual form of money that uses cryptography for security and operates on decentralized networks like blockchain, allowing peer-to-peer transactions without intermediaries like banks; Bitcoin, launched in 2009, was the first, but thousands exist today, valued at over $2 trillion globally as of 2025.

Legal Classification as Property: In India, this ruling treats crypto as intangible property—something you own, control, and can transfer—like shares or intellectual rights—enabling courts to protect it via trusts, injunctions, or recovery; previously, ambiguity left investors vulnerable in disputes, hacks, or insolvencies.

Investor Protection Angle: For the 100 million+ Indian users (per Chainalysis 2025 report), it means exchanges must act as fiduciaries, holding assets in trust, reducing risks from events like the WazirX hack; this could lead to easier claims under laws like the Insolvency and Bankruptcy Code.

What was the background of the Madras High Court case?

The WazirX Hack Incident: In July 2024, WazirX suffered a $230 million cyberattack, primarily stealing Ethereum from a multisig wallet; the exchange, operated by Singapore-based Zettai Pte Ltd with Indian arm Zanmai Labs, froze user accounts including the petitioner's XRP, which she claimed was untouched.

Petitioner's Arguments: Rhutikumari argued her holdings were distinct, sought an anti-suit injunction against Singapore arbitration, and urged recognition of crypto as property; the court agreed, citing jurisdiction since transactions originated in Chennai via Indian banks.

Court's Rationale and Precedents: Justice Venkatesh referenced Supreme Court cases like Jilubhai Nanbhai Khachar vs State of Gujarat (1995) to expand "property" under Article 300A, and international rulings (e.g., UK's AA vs Persons Unknown, 2019) to affirm crypto's ownership traits despite intangibility.

How does India's regulatory landscape for cryptocurrency look today?

Taxation as Virtual Digital Assets: The 2022 Finance Act introduced a 30% flat tax on crypto gains (no loss offset) and 1% TDS on transfers over Rs 50,000, treating VDAs under Section 2(47A) of the Income Tax Act; this implies recognition for revenue but not as legal tender.

FIU and AML Compliance: The Financial Intelligence Unit-India (FIU-IND) mandates exchanges to register and follow anti-money laundering (PMLA) rules since 2020; WazirX complied, but the ruling strengthens FIU's role in enforcing fiduciary duties.

Gaps and Pending Reforms: No dedicated crypto law exists, unlike the US's FIT21 Act or EU's MiCA; a 2023 parliamentary panel recommended regulation, but delays persist; this judgment urges faster action to prevent illicit flows (estimated $1 billion annually in India).

What does the infographic in the report reveal about the ruling's implications?

Visual Structure and Key Questions: The infographic poses five questions in numbered panels: (1) What was the case about? (WazirX investor's frozen XRP post-hack), (2) What did the court say? (Crypto as essential property, no doubt), (3) Legal landscape? (RBI ban lifted 2020, 30% tax/1% TDS), (4) Ruling for investors? (Long-term recognition, anti-money laundering), (5) Next for India? (Vague guidelines, need for law).

Data and Icons Breakdown: Icons of coins and locks symbolize protection; it highlights the 2020 Supreme Court lift of RBI's banking ban and 2022 tax regime, projecting investor relief via guarantees; a flowchart links hack → freeze → court intervention → escrow.

Analytical Insights: The graphic emphasizes fiduciary duties on exchanges and global alignment (e.g., UK's property status), warning of regulatory voids; it visually projects a 20-30% confidence boost for users, per embedded stats on 100 million Indian holders.

What are the broader economic and global implications for India?

Boost to Crypto Adoption: With $4 billion in 2024 transactions (per KPMG), the ruling could attract $10-15 billion FDI by 2030, fostering blockchain startups; it aligns with Digital India, but risks volatility (crypto lost 50% value in 2022 crash).

Global Comparisons and Lessons: Like Singapore's Payment Services Act (2019) or US SEC classifications, India's step promotes innovation; however, without full regulation, it mirrors El Salvador's Bitcoin pitfalls (hyperinflation risks).

Policy Recommendations: Experts suggest a Crypto Bill with licensing, stablecoin rules, and CBDC integration (RBI's e-Rupee pilot since 2022); this balances growth (projected 20% GDP contribution by 2030) with financial stability.

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