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The case stemmed from a dispute involving crypto exchange WazirX, whose Indian-operated entity is Zanmai Labs Pvt Ltd.. After a major hack in July 2024 that reportedly resulted in losses of over USD 230 million in crypto assets, the exchange proposed a “socialisation of losses” plan affecting all users – including those not affected by the breach. One user, who held 3,532.30 XRP tokens, challenged the plan and sought interim relief from the Madras High Court.
In the judgment, the court emphasised that although cryptocurrencies are essentially “streams of 1s and 0s” on a blockchain, they possess the characteristics of property: identifiability, exclusivity of control via private keys, transferability and value. The court referenced Section 2(47A) of the Income Tax Act, 1961, which defines “virtual digital assets” in India, and clarified that these assets are not mere speculative transactions.
Legal observers say the ruling is a crucial step in providing investor protections in India’s crypto ecosystem. With this classification, holders of tokens like XRP may now seek rights and remedies similar to those available for other forms of property. The judgment also places custodial duties on exchanges, meaning platforms cannot simply reallocate or appropriate user assets without legal basis.
However, the ruling carries certain caveats. It is an interim order in a specific case and uses particular facts such as the fact that the user purchased the tokens via an Indian bank account and accessed the platform from India. Thus, whether the property-status principle will apply broadly across all crypto tokens and platforms remains to be tested before higher courts.
The implications are multiple. For investors, this decision enhances clarity around digital asset ownership, rights to protection in cases of exchange failure, hacking, or insolvency. For exchanges and custodians, it raises the standards for asset-holding, governance and transparency. On the regulatory front, while India does not yet have a comprehensive crypto law, the judgment nudges the legal framework forward by establishing that digital assets can sit within existing legal concepts of property, trusts and fiduciary duty.
As India’s digital economy continues to evolve, this ruling may influence how other jurisdictions view digital assets, and it may prompt policymakers to craft clearer regulation, led by investor protection, financial stability and innovation balance. It also marks a notable alignment of Indian jurisprudence with global precedents in England, Singapore and New Zealand courts similarly held cryptocurrencies may qualify as property.
FAQs
Q1: What does it mean that XRP is recognised as property in India?
It means that under this ruling, tokens like XRP are treated under Indian law as assets which can be owned, transferred, stored and held in trust similar to other valuable rights rather than merely speculative items.
Q2: Does this ruling apply to all cryptocurrencies or only XRP?
The ruling originated in a case involving XRP but the reasoning extends to “cryptocurrency” broadly; whether it will automatically apply to all tokens remains subject to further judicial or legislative clarification.
Q3: How does this decision affect investors and exchanges?
Investors gain stronger legal footing to protect assets from misuse, exchange insolvency or hacking. Exchanges face increased obligation to treat user holdings with custodial responsibility and cannot freely repurpose them without legal basis.
Q4: Does this change the regulatory status of cryptocurrencies in India?
Not yet. India still lacks a dedicated comprehensive crypto law, but the ruling influences how existing laws (like property, trust and taxation) apply to digital assets increasing legal certainty.
Q5: Are cryptocurrencies now legal tender in India?
No. The ruling defines cryptocurrencies as property, not as legal tender. They are not recognised as money issued by a central bank, but rather as assets capable of legal protection.
Q6: What about tax and inheritance concerns for crypto assets now?
Since digital assets are now recognised as property, tax authorities, inheritance laws and insolvency frameworks may treat them similarly to other assets though specific rules will depend on future legislation and further court decisions.
