Digital Assets, Real Rights: Court Grants Crypto Legal Ownership

The Madras High Court has delivered a landmark ruling, recognizing cryptocurrency as a form of property under Indian law, a decision that could reshape the legal and regulatory landscape for digital assets in the country. Justice N. Anand Venkatesh declared that cryptocurrencies, though intangible, qualify as property capable of being owned, transferred, and held in trust, as the Indian court ruling found. The ruling emerged from a case involving the WazirX exchange hack in July 2024, where a user's 3,532.30 XRP coins—unaffected by the $230 million Ethereum-based theft—were protected from redistribution under the exchange's "socialization of losses" plan, as the WazirX ruling held. The court emphasized that crypto assets are identifiable, transferable, and governed by private keys, aligning with the definition of "virtual digital assets" under India's Income Tax Act, a point the crypto.news report also notes.

The decision underscores the court's jurisdiction over domestic crypto holdings, rejecting WazirX's argument that Singapore arbitration rules precluded Indian intervention. Justice Venkatesh cited a 2021 Supreme Court precedent affirming that assets located in India fall under local judicial protection, as noted in the crypto.news coverage. The ruling also clarified that crypto tokens like XRP, distinct from the stolen ERC-20 tokens, are separate assets, invalidating claims that the investor should share losses from the hack, as detailed in coverage of the WazirX ruling.

Legal experts and industry leaders have hailed the judgment as a foundational step for India's crypto jurisprudence. Sudhakar Lakshmanaraja of Digital South Trust noted the ruling strengthens consumer protection and paves the way for clearer regulatory frameworks, according to Yahoo Finance's reporting on the WazirX ruling. Vikram Subburaj, CEO of Giottus, described the decision as a signal that India's high-tech sector will face "high standards of governance and protection." The court's reliance on international precedents—from New Zealand, the UK, Singapore, and the U.S.—further reinforces the global trend of treating crypto as property, as observed in the crypto.news analysis.

The judgment carries significant implications for taxation, inheritance, and contractual enforcement involving digital assets. By defining crypto as property, the court has laid groundwork for resolving disputes over ownership and custody, particularly in cases where exchanges hold assets in trust, a point highlighted by the crypto.news report. However, India's regulatory framework remains fragmented, with strict tax rules but minimal guidance on investor rights or asset protection. The ruling now places pressure on policymakers to create a comprehensive legal structure that balances innovation with consumer safeguards, according to Decrypt.

As the crypto ecosystem evolves, the Madras High Court's decision marks a pivotal moment, affirming the rights of digital asset holders while setting a precedent for future litigation. With courts increasingly stepping into regulatory gaps, India's approach to crypto governance appears poised for a transformative shift.