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Madras High Court Recognizes Cryptocurrency as Property: A Landmark Ruling for Indian Crypto Investors

In a landmark decision that could reshape the legal landscape for digital assets in India, the Madras High Court has officially recognized cryptocurrency as property under Indian law. While the court clarified that cryptocurrencies are intangible and do not constitute legal tender, the judgment establishes that they meet the legal criteria to be classified as property, making them capable of ownership, enjoyment, and even being held in trust.

The ruling, delivered by Justice Anand Venkatesh, comes at a crucial moment as India continues to navigate regulatory uncertainty surrounding cryptocurrencies. This judgment provides a new legal precedent that reinforces the rights of crypto investors and may influence future disputes involving digital assets.

Source: X

Case Background: Rhutikumari v. Zanmai Labs Pvt Ltd

The case, Rhutikumari v. Zanmai Labs Pvt Ltd, involved an investor seeking legal recourse after her XRP holdings on the WazirX platform were temporarily frozen following a cyberattack in 2024. The petitioner, Ms. Rhutikumari, had purchased XRP tokens worth ₹1,98,516 in January 2024. While the investor’s XRP portfolio remained unaffected by the cyberattack that compromised WazirX’s cold wallets, which held Ethereum and other ERC-20 tokens, the investor argued that her digital assets were effectively held in trust by the platform.

In her petition, she requested protection under Section 9 of the Arbitration and Conciliation Act, 1996, seeking an injunction to prevent the redistribution or reallocation of her XRP holdings until the matter was resolved. Her legal team argued that the assets were her property, and any action taken by the platform without her consent could constitute a breach of trust.

Jurisdiction Debate: India vs. Singapore

The respondents, including Zanmai Labs, opposed the claim. They cited restructuring proceedings initiated by their Singapore-based parent company, Zettai Pte Ltd, and argued that the Singapore High Court had already approved a scheme in which all users would proportionally share losses from the cyberattack. Zanmai Labs contended that the Madras High Court lacked jurisdiction to intervene, as arbitration agreements specified Singapore as the dispute resolution venue.

Justice Venkatesh, however, rejected this jurisdictional challenge. He highlighted that a portion of the cause of action originated in India, noting that the investor’s funds had been transferred from an Indian bank account and the platform was accessed from within the country. Additionally, the court emphasized that Zanmai Labs, which operated WazirX’s Indian segment, was a registered Indian entity, whereas Zettai and Binance were foreign entities. This distinction allowed the court to assert jurisdiction over the case.

Key Legal Findings: Cryptocurrency as Property

The court’s ruling is notable for its legal reasoning regarding the status of cryptocurrencies in India. Justice Venkatesh observed that although cryptocurrencies are intangible and lack legal tender status, they satisfy the legal definition of property. This recognition implies that digital assets can be:

• Owned by individuals or entities.

• Held in trust or as custodial assets.

• Subject to legal protections, including injunctions and claims in civil disputes.

By granting interim relief to the investor, the court effectively prevented the redistribution or reallocation of her XRP holdings while the dispute is pending. This interim measure reinforces the principle that digital assets deserve the same legal protections as traditional property in India.

Implications for Indian Crypto Investors

This decision carries significant implications for cryptocurrency users and investors across India. First and foremost, it provides legal clarity regarding the ownership and protection of digital assets. Investors can now confidently assert property rights over cryptocurrencies held in exchanges, wallets, or custodial accounts.

The ruling also signals that Indian courts are willing to recognize the unique characteristics of blockchain-based assets. While cryptocurrency may not yet be recognized as currency, it is legally acknowledged as a form of property that can be owned, transferred, and protected under existing civil laws.

For crypto exchanges and custodians, the judgment underscores the importance of maintaining clear records of user holdings and ensuring transparency in asset management. Any unilateral action by a platform to redistribute or seize user holdings may now be subject to legal scrutiny and injunctions.

Broader Legal and Regulatory Context

India’s regulatory approach to cryptocurrencies has historically been cautious. The Reserve Bank of India (RBI) imposed restrictions on banking services for crypto exchanges in 2018, which were later overturned by the Supreme Court in 2020. Since then, the country has explored frameworks for digital assets, including potential taxation, securities regulations, and investor protections.

The Madras High Court’s recognition of cryptocurrency as property complements ongoing efforts to integrate digital assets into India’s legal and financial ecosystem. While the government has yet to pass comprehensive cryptocurrency legislation, this ruling offers interim guidance for courts, investors, and exchanges navigating disputes over digital holdings.

Potential Impact on Future Litigation

The judgment sets a precedent for other investors facing disputes with crypto exchanges or custodians. Legal experts suggest that it could influence cases involving:

• Frozen or seized digital assets.

• Cyberattacks affecting investor holdings.

• Disputes over custodial responsibilities of exchanges.

• Claims related to inheritance or trust arrangements involving cryptocurrency.

By establishing that cryptocurrencies are property, the ruling creates a foundation for civil remedies, including injunctions, damages, and trust claims, to be applied to digital assets in Indian courts.

Market Reactions and Industry Perspective

Industry participants have largely welcomed the ruling as a positive step toward legal certainty. Crypto advocacy groups argue that recognizing digital assets as property strengthens investor confidence and encourages wider adoption of blockchain technology in India. Exchanges operating domestically may also view the decision as guidance for risk management and compliance, particularly in structuring user agreements and dispute resolution protocols.

Conclusion

The Madras High Court’s decision represents a milestone for cryptocurrency regulation and legal recognition in India. By affirming that digital assets can be treated as property, the court provides a clear framework for ownership, trust arrangements, and investor protections. This ruling not only safeguards individual holdings but also strengthens the broader credibility of the cryptocurrency market in India.

As digital assets continue to gain popularity and usage in India, the judgment underscores the judiciary’s readiness to adapt legal interpretations to the evolving technological landscape. For investors, exchanges, and policymakers alike, this decision offers an important touchstone in understanding how cryptocurrencies fit into India’s legal and financial framework.

Writer @Ellena

Erlin is an experienced crypto writer who loves to explore the intersection of blockchain technology and financial markets. She regularly provides insights into the latest trends and innovations in the digital currency space.

 

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