India's judiciary declares cryptocurrency as lawful property in a historic decision

The Madras High Court in India has issued a significant judgment, officially recognizing cryptocurrency as a type of property under Indian law. This decision prevents WazirX from reallocating a user's frozen

assets during the exchange’s restructuring process following a hacking incident. Delivered by Justice N. Anand Venkatesh on October 25, the ruling represents a major change in the legal treatment of digital assets in India, providing enhanced protection for investors involved in international crypto disputes, as reported by .

The dispute involves Rhutikumari, an investor from Chennai who owned 3,532 XRP tokens on WazirX, which were not impacted by the platform’s $230 million security breach in July 2024. After the hack, WazirX froze accounts and began a restructuring plan based in Singapore, suggesting a "socialized loss" method to redistribute assets. The court, however, dismissed this proposal, stating that cryptocurrency qualifies as "property that can be possessed, enjoyed, and held in trust," according to Coinpedia, and ordered WazirX to secure Rhutikumari’s assets with a ₹9.56 lakh ($11,500) bank guarantee until arbitration is resolved.

This verdict challenges WazirX’s efforts to subject Indian users to its overseas restructuring, which had received approval from Singapore’s High Court on October 13, as noted by

. Justice Venkatesh pointed out that since Rhutikumari’s investment was made from her Indian bank account and managed through WazirX’s Indian operations, the Madras High Court has authority under Section 9 of the Arbitration and Conciliation Act, a detail emphasized by . This aligns with international legal trends, such as New Zealand’s Cryptopia case, which also classified crypto as "intangible property that can be held in trust."

WazirX, which reopened trading on October 24 after being inactive for 16 months, has received mixed feedback. Some users appreciated the gradual reopening and the introduction of zero-fee trading for USDT/INR pairs, while others voiced frustration over ongoing withdrawal restrictions. The exchange’s restructuring plan aims to return 85% of user funds by July 2024, with the rest to be paid out over three years, according to the

. Despite this, users have reported only partial recovery of their assets and continued difficulties accessing funds.

The court also criticized WazirX’s "socialized loss" approach, describing it as "unacceptable and outside the contractual agreement." This echoes a recent decision by the Bombay High Court, which blocked similar asset redistribution by Bitcipher Labs. Legal professionals believe the Madras High Court’s ruling reinforces the fiduciary responsibilities of exchanges and highlights the judiciary’s crucial role in protecting crypto rights amid regulatory uncertainty in India.

This judgment establishes a new legal standard for India’s crypto industry, treating digital currencies as property and potentially shaping future bankruptcy proceedings and investor protections. Sudhakar Lakshmanaraja from Digital South Trust commented that the decision "bolsters consumer rights and lays the groundwork for clearer regulations," as cited by

. Nevertheless, the government’s 30% tax on crypto transactions and the absence of comprehensive investor protections remain controversial issues.

As WazirX moves forward with its relaunch, the Madras High Court’s involvement highlights the increasing legal and regulatory challenges facing India’s crypto sector. With many users still waiting for their funds, the case underscores the ongoing conflict between international restructuring efforts and domestic legal protections—a dispute now firmly rooted in India’s courts.