CHENNAI – The Madras High Court on Saturday ruled that cryptocurrency qualifies as "property" under Indian law. This landmark decision means digital assets can be legally owned and held in trust, offering new clarity for investors and the evolving crypto market in India. The ruling came from Justice N. Anand Venkatesh and is expected to significantly influence future legal and regulatory approaches to virtual assets across the country. ^{[1][2][3][4][5]}### Landmark Decision Follows WazirX Hack The court's judgment followed a petition filed by an investor named Rhutikumari against Zanmai Labs Pvt Ltd, the operator of the WazirX cryptocurrency exchange. T^{[2][6][7][8][9]}he petitioner's 3,532.30 XRP tokens, valued at approximately ₹1.98 lakh (about $2,260), were frozen after a major cyberattack on WazirX in July 2024. The^{[1][10][11][7][8]} hack targeted Ethereum and ERC-20 tokens, leading to an estimated $230 million loss and widespread account freezes on the platform. Th^{[1][10][11][7]}e investor argued that her XRP holdings were distinct from the compromised Ethereum-based tokens. She sought judicial protection, stating that WazirX held her digital assets in trust. The^{[1][10][6][7][8][9]} court granted interim protection to her holdings, preventing their redistribution while the matter progresses. ##^{[3][12][8][9]}# Court's Reasoning: Property, Not Currency Justice N. Anand Venkatesh stated that while cryptocurrencies like XRP are not legal tender or physical goods, they possess all the essential characteristics of property. "It^[1][10][4] is not a tangible property nor is it a currency. However, it is a property, which is capable of being enjoyed and possessed… capable of being held in trust," the judge observed. The c^{[1][4][12][7]}ourt detailed that digital assets are definable, identifiable, transferable, and exclusively controlled through private keys. These features make them satisfy the conditions to be identified as property. The ^{[10][4][9][13]}court also referenced Section 2(47A) of the Income Tax Act, 1961, which classifies cryptocurrencies as "virtual digital assets" (VDAs). This ^{[1][2][10][4][11][7][13]}statutory recognition, according to the judge, strengthens their legal status as assets capable of ownership, transfer, and taxation under Indian law. The r^[1][2][14]uling clarified that cryptocurrency is treated as a virtual digital asset and not a speculative transaction under Indian law. The ^{[2][4][7][13]}court dismissed Zanmai Labs' argument that its Singapore-based parent firm, Zettai Pte Ltd, was undergoing a restructuring process requiring all users to share losses collectively. Justi^{[1][4][11][8]}ce Venkatesh clarified that the petitioner's XRP tokens were different from the ERC-20 tokens affected by the cyberattack. "What^{[1][4][11][7][8]} were subjected to the cyberattack were ERC-20 coins, which are completely different cryptocurrencies not held by the applicant," the Court stated. ### ^{[1][4][11][8]}Asserting Indian Jurisdiction and Investor Protection The Madras High Court asserted its jurisdiction in the case. It noted that the investor's transactions originated in Chennai and involved an Indian bank account. This ^{[2][10][4][8][15]}established that a significant part of the cause of action arose within its territorial limits. The c^[8][15]ourt also highlighted that Zanmai Labs is registered with India's Financial Intelligence Unit (FIU) and is authorized to handle cryptocurrency in India. This ^{[2][10][4][7][8]}is unlike its Singaporean parent, Zettai Pte Ltd, or its former partner, Binance, which are not registered as reporting entities in India. The ^{[10][4][7][8][9]}court's decision rejected the "Socialisation of Losses" proposal. It affirmed that assets belonging to users cannot be redistributed to offset losses of other users or entities. This ^[3][12]emphasizes that digital holdings are held in trust for their rightful owners. The j^[3][12]udgment cited the Supreme Court's 2021 ruling in PASL Wind Solutions Pvt Ltd v. GE Power Conversion India Pvt Ltd. This precedent allows Indian courts to protect assets located in India, even if arbitration proceedings take place abroad. This ^{[10][3][12][14]}legal framework provides clear grounds for domestic investors to seek redress in crypto-related disputes. ### ^[3]Broader Implications for India's Crypto Ecosystem Legal experts view this ruling as a significant moment for India's crypto and fintech industries. It es^[1][3]tablishes a legal basis for ownership rights, dispute resolution, and asset protection, areas that have long faced regulatory uncertainty. Shara^{[1][3][6][16]}t Chandra, a blockchain policy analyst, noted that the judgment sets a "jurisdictional benchmark for Web3 platforms operating across borders but serving Indian users." This^[3] classification of cryptocurrency as property strengthens investor confidence. It signals to policymakers that a formal regulatory structure for crypto is increasingly necessary. The r^{[1][3][6][14]}uling provides clarity for various legal scenarios, including inheritance, insolvency, and contractual enforcement involving digital assets. Just^[13][16][17]ice Venkatesh also urged stricter governance for Web3 platforms. He recommended implementing corporate standards such as separate client funds, independent audits, and robust Know Your Customer (KYC) and Anti-Money Laundering (AML) checks. This ^{[10][4][11][14][18]}aligns Indian courts with global trends where nations are increasingly classifying cryptocurrencies as property for purposes of ownership, inheritance, and taxation. The M^{[1][3][13][17]}adras High Court's reasoning positions Indian courts at the forefront of digital asset jurisprudence, echoing similar rulings in New Zealand, the UK, Singapore, and the US. This^[13][17] judgment marks a pivotal step toward mainstream crypto adoption in India. It ensures that investors' rights are judicially enforceable and that crypto holdings receive protection similar to other valuable assets. The r^{[1][6][14][16]}uling offers interim guidance for courts, investors, and exchanges navigating disputes over digital holdings. It cr^[6]eates a foundation for civil remedies, including injunctions and damages, to be applied to digital assets in Indian courts. The ^[6]Madras High Court's decision represents a crucial development for India's digital economy. It provides much-needed legal clarity on the status of cryptocurrencies, reinforcing investor protections and paving the way for a more structured and regulated digital asset landscape in the future. META^{[3][6][14][16]}_TITLE: Madras High Court Declares Crypto as Property, Can Be Held in Trust