Madras High Court recognizes cryptocurrency as property in landmark WazirX ruling, establishing legal protections for India’s 100 million crypto investors.
The Madras High Court delivered a watershed ruling Saturday recognizing cryptocurrency as “property” under Indian law—a decision that grants digital assets legal standing and establishes judicial protections for the country’s estimated 100 million crypto investors.
Justice N. Anand Venkatesh issued the 54-page judgment in Rhutikumari v. Zanmai Labs Pvt Ltd, declaring that while cryptocurrencies like XRP are neither tangible assets nor legal tender, they possess all essential characteristics of property and can be owned, enjoyed, and held in trust. “There can be no doubt that ‘crypto currency’ is a property. It is not a tangible property nor is it a currency. However, it is a property, which is capable of being enjoyed and possessed (in a beneficial form). It is capable of being held in trust,” the court stated.
The ruling establishes critical legal precedent as India navigates regulation of its rapidly expanding cryptocurrency market, where digital assets remain unregulated but are taxed at 30% under the 2022 Finance Act.
WazirX Cyberattack Sparks Legal Battle
The case emerged after investor Rhutikumari’s 3,532.30 XRP tokens—worth ₹1.98 lakh—were frozen following a devastating July 18, 2024 cyberattack on WazirX exchange. The hack compromised the platform’s cold wallet, resulting in approximately $230 million in losses from Ethereum and ERC-20 tokens, prompting WazirX to freeze all user accounts.
Rhutikumari filed a petition under Section 9 of the Arbitration and Conciliation Act, 1996, arguing her XRP holdings were distinct from the stolen Ethereum-based tokens and should be protected from redistribution. WazirX, operated by Zanmai Labs Pvt Ltd, opposed the plea by citing a Singapore High Court-approved restructuring scheme initiated by parent company Zettai Pte Ltd that required all users to share losses proportionally.
Justice Venkatesh decisively rejected this argument, noting the investor’s assets were unaffected by the breach. “What were held by the applicant as crypto currencies were 3532.30 XRP coins. What were subjected to cyber attack on 18.7.2024 in the WazirX platform were ERC 20 coins, which are completely different crypto currencies not held by the applicant,” the court observed.
Defining Cryptocurrency as Property
Justice Venkatesh devoted substantial analysis to examining how cryptocurrency fits within established legal concepts of property. Referencing landmark Indian cases Ahmed GH Ariff v. CWT and Jilubhai Nanbhai Khachar v. State of Gujarat, the court noted that “property” under Indian jurisprudence encompasses “every species of valuable right and interest”.
The judgment established that although digital tokens consist merely of blockchain data, they are definable, identifiable, transferable, and capable of exclusive control through private keys—characteristics sufficient to confer proprietary status. The court also cited Section 2(47A) of the Income Tax Act, 1961, which recognizes cryptocurrencies as “virtual digital assets,” reinforcing their legal standing within India’s tax framework.
“In Indian law regime, the crypto currency is treated as a virtual digital asset and it is not treated as a speculative transaction,” Justice Venkatesh wrote.
Global Precedents Shape Indian Crypto Law
The Madras High Court drew extensively from international case law to support its determination. Justice Venkatesh referenced the New Zealand High Court’s decision in Ruscoe v. Cryptopia Ltd (in liquidation) and the UK High Court ruling in AA v. Persons Unknown, both of which concluded that cryptocurrencies constitute property capable of being held in trust.
This alignment with global legal trends positions India within an emerging international framework recognizing digital assets as legitimate property requiring judicial protection.
Jurisdictional Authority Affirmed
The court dismissed WazirX’s jurisdictional objections, which claimed the Madras High Court lacked authority because arbitration proceedings were seated in Singapore. Citing the Supreme Court’s ruling in PASL Wind Solutions Pvt Ltd v. GE Power Conversion India Pvt Ltd (2021), Justice Venkatesh held that Indian courts can grant interim protection under Section 9 where assets located in India require safeguarding.
The court noted that Rhutikumari transferred funds from her Kotak Mahindra Bank account in Chennai to purchase crypto assets on WazirX and accessed the platform from within India, establishing territorial jurisdiction. Additionally, Zanmai Labs’ registration as a reporting entity under India’s Financial Intelligence Unit distinguished it from its Singapore parent and former partner Binance, which lack authorization to handle cryptocurrency within India.
Implications for India’s Crypto Ecosystem
The ruling grants interim protection to Rhutikumari, restraining Zanmai Labs and its directors—including co-founder Nischal Shetty—from redistributing, apportioning, or reallocating her holdings until an arbitral tribunal resolves the dispute. Justice Venkatesh acknowledged that if the Singapore restructuring scheme substantially eroded the applicant’s assets, she would become “a vulnerable party, who will be entitled for a protection”.
This decision provides crucial clarity for digital asset ownership disputes and strengthens investor protections amid India’s evolving regulatory landscape. The judgment also calls for stricter governance of Web3 platforms, including independent audits, client fund segregation, and robust KYC/AML compliance measures.
Legal experts view this as a foundational precedent that establishes judicial oversight of cryptocurrency exchanges and reinforces the proprietary rights of digital asset holders in India’s burgeoning crypto market.
Join our Telegram Channel