XRP News Today: Landmark Ruling: Indian Court Grants Legal Protection to Cryptocurrency as Property

The Madras High Court has recognized cryptocurrency as property under Indian law, a landmark ruling that provides legal protection for digital assets in the country. In a case involving investor Rhutikumari and WazirX, the court barred the exchange from reallocating her XRP holdings following a $230 million hack, affirming that crypto exhibits essential features of property such as ownership and transferability, according to a Coinotag report. The judgment, delivered by Justice N. Anand Venkatesh, underscores that while cryptocurrencies are not legal tender, they qualify as intangible assets capable of being held in trust and protected under existing legal frameworks, as noted in a crypto.news article.

The ruling emerged from a dispute over the WazirX hack in July 2024, which saw hackers steal Ethereum and ERC-20 tokens, prompting the exchange to freeze all user accounts, including Rhutikumari's XRP holdings. The court rejected WazirX's attempt to include unaffected assets in a loss-sharing plan under a Singapore-approved restructuring, emphasizing that XRP and ERC-20 tokens are distinct assets. "What were held by the applicant as cryptocurrencies were 3,532.30 XRP coins. What were subjected to cyber attack... were ERC 20 coins, which are completely different," the court noted in a Coinotag piece. This distinction ensures that investors' unaffected holdings remain shielded from redistribution during recovery processes.

The judgment drew on precedents such as Ahmed GH Ariff v. CWT and Jilubhai Nanbhai Khachar v. State of Gujarat, defining property as any "valuable right or interest." It also referenced global rulings, including Ruscoe v. Cryptopia Ltd. (New Zealand) and AA v. Persons Unknown (UK), to affirm that cryptocurrencies meet the criteria of identifiability, transferability, and exclusive control via private keys, as explained in the Coinotag report. Furthermore, the court highlighted India's existing classification of crypto as a "virtual digital asset" under the Income Tax Act, 1961, reinforcing its legal standing beyond speculative transactions, a point also covered in the crypto.news article.

Jurisdictional clarity was another key aspect. Despite WazirX's reliance on Singapore-based arbitration, the court invoked the Supreme Court's PASL Wind Solutions v. GE Power Conversion India (2021) precedent, asserting its authority to protect assets transacted within India. The investor's transactions originated from a Chennai-based bank account, solidifying the Madras High Court's jurisdiction, as reported in the Coinotag piece. This decision sets a critical precedent for Indian courts to intervene in domestic crypto disputes, even when international restructuring plans are in play.

The ruling has significant implications for India's crypto ecosystem, where over 20 million users hold digital assets. By classifying crypto as property, the court enables legal remedies such as injunctions against unauthorized disposals, potentially mitigating risks from platform failures. For investors, the judgment reinforces the need for exchanges to segregate user funds, conduct audits, and comply with anti-money laundering norms, as seen in global failures like Mt. Gox and FTX, a concern highlighted in the Coinotag report.