Madras HC recognises cryptocurrency as property: What the landmark ruling means for Indian investors

With crypto recognised as property, investors now have stronger legal tools to protect their assets

In a landmark ruling, the Madras High Court has recognised cryptocurrency as “property” under Indian law, marking a crucial turning point for digital asset investors in India. The judgment comes from a case involving an investor whose XRP tokens on WazirX were frozen following a 2024 cyberattack.

By holding that crypto assets can be “owned, enjoyed, and held in trust”, the court has effectively granted them the same civil protection that applies to other movable property. The interim order could significantly reshape investor rights, offering new legal remedies in cases of hacks, exchange collapses, or misappropriation.

 A major step for legal recognition

Legal experts say this is a watershed moment for the crypto ecosystem in India. “The High Court held categorically that cryptocurrency qualifies as ‘property, intangible property that is capable of being enjoyed and possessed in a beneficial form and held in trust,” says Ashutosh K. Srivastava, Partner, SKV Law Offices. “Even in the absence of a dedicated regulatory framework, this recognition means crypto holdings now attract property law protections such as injunctions, trust claims, and remedies for misappropriation.”

The ruling is binding on subordinate courts in Tamil Nadu and is likely to influence other High Courts. It also aligns with the Supreme Court’s 2020 judgment that lifted the RBI’s banking ban on crypto and reinforces the existing definition of “Virtual Digital Assets (VDAs)” under the Income Tax Act (Sections 115BBH and 194S).

“This is a significant precedent recognizing cryptocurrency as property, confirming it can be owned, enjoyed, and held in trust,” says Alay Razvi, Managing Partner, Accord Juris. “It gives clearer legal footing for ownership, custody, and investor remedies, even though regulatory clarity is still evolving.”

How this reshapes investor rights

The court’s recognition changes how crypto investors are viewed from mere platform users to true owners of their assets.

“This transforms Indian crypto investors into legal owners with enforceable proprietary rights,” says B. Shravanth Shanker, Advocate-on-Record, Supreme Court of India. “They are no longer unsecured creditors but beneficiaries with fiduciary rights owed by exchanges.”

In simple terms, this means that when investors deposit crypto on an exchange, the exchange acts as a custodian or trustee, not the owner. Investors can now challenge wrongful freezes, redistribution of assets, or forced socialisation of losses.

For instance, in the WazirX case, the High Court prevented the platform from redistributing unaffected XRP tokens to compensate for losses from an unrelated hack involving Ethereum-based coins. This sends a strong message that user holdings cannot be arbitrarily mixed, reallocated, or treated as exchange property.

During insolvency proceedings, investors can now argue that their digital assets be excluded from the company’s liquidation estate if those assets were held in trust. This distinction could prove critical in cases like FTX or Zettai (WazirX’s parent entity), where customer funds were intermingled.

What investors can do now

With crypto recognised as property, investors now have stronger legal tools to protect their assets. Investors can approach courts to prevent exchanges from selling, transferring, or freezing tokens during disputes.

Victims of hacks or fraud can demand the return of identifiable tokens or their equivalent value. Exchanges can be held accountable for failing to safeguard customer assets. Investors can petition the National Company Law Tribunal (NCLT) to ensure their assets are not treated as part of the exchange’s own estate. Moreover, victims of theft can file FIRs under the Information Technology Act (Section 66) or the Bharatiya Nyaya Sanhita for theft and cheating.

However, enforcement remains complex, especially when servers and exchanges are located overseas. “Private keys can be moved instantly, and cross-border enforcement depends on cooperation from foreign entities,” says Razvi. “Courts may rely on injunctions, blockchain tracing, and regulator coordination to bridge these gaps.”

Tax and compliance implications

While the ruling changes ownership rights, it does not alter how crypto is taxed. Profits from virtual digital assets remain taxable at 30 percent under Section 115BBH, and 1 percent TDS applies to transactions under Section 194S.

According to Srivastava, “By recognising crypto as ownable property rather than speculative instruments, the judgment legitimizes VDA taxation and strengthens the government’s position that these assets must be declared for tax purposes.”

It also adds pressure on exchanges to maintain high compliance standards under the Prevention of Money Laundering Act (PMLA), which already designates them as “reporting entities”. This means stronger KYC norms, audit trails, and data disclosures will become standard practice.

Challenges remain

Despite the positive direction, several hurdles persist. Many exchanges operate offshore, complicating asset recovery when fraud or mismanagement occurs. India’s lack of bilateral recovery mechanisms and differences in global insolvency laws  like Singapore’s Chapter 11-style proceedings can dilute investor claims.

The court acknowledged these issues, noting that “cross-border recovery hinges on rapid tracing, KYC-compliant off-ramps, and cooperation from foreign virtual asset service providers.”

 Why this matters for Indian investors

“This ruling gives investors a clearer proprietary basis, better interim relief, and stronger segregation arguments in distress,” says Razvi. “It pushes exchanges toward trust-like custody, which is a step forward for investor protection.”

While crypto investing still carries risk the Madras High Court’s decision is a landmark in setting up legal ownership and accountability standards.