Crypto Wins Legal Status In India — High Court Calls It ‘Property’

The Madras High Court has ruled that cryptocurrencies can be treated as property, a decision that could reshape how exchanges handle user assets following hacks.

The court found that certain cryptocurrency holdings are identifiable and controllable and therefore eligible for legal protection similar to other movable money ownership.

Cryptocurrency is treated as property under the law

According to the Madras High Court, crypto assets meet basic tests of ownership because they can be owned, transferred and controlled by private keys.

The judge said that. Anand Venkatesh that they can be held “in trust”, and that they are neither physical goods nor traditional currency but property nonetheless.

based on ReportsThe decision relied in part on the Income Tax Act’s definition of “virtual digital assets” under Article 2(47A).

WazirX Hack and Disputed Properties

Reports revealed that WazirX suffered a major security breach on July 18, 2024, when its cold wallet was hacked and approximately $230 million worth of Ethereum and ERC-20 tokens were taken.

A WazirX user who owned 3,532 XRP — worth approximately Rs 1.98 lakh in January 2024 — asked the court to protect her coins from being dipped into any pooled compensation arrangement for the stolen funds. The court agreed that its XRP currency was separate from the tokens stolen in this hack.

The court rejects the arbitration barrier

MinisterX It argued that disputes should go to arbitration in Singapore under its agreements. The court rejected that view in this case because the transactions had clear links to India — the funds came from Indian bank accounts and the stock exchange was registered in India.

Jurisdiction was thus left to the Madras High Court, and an interim relief order was issued to prevent the user’s XRP from being reallocated as part of the hack losses.

What this means for users and exchanges

The ruling gives a stronger legal basis for individual users to legally challenge exchanges in Indian courts if they feel their funds have been misrepresented or exploited.

Exchanges may be required to have a more robust record-keeping system, clearer segregation of client funds, and direct audit trails.

According to reports, the judges pointed to the technical characteristics of Cryptocurrencies – Transferability, identifiability, and exclusive control – which support the conclusion that legal ownership can be recognized.

Potential future tax and legal implications

Tax experts are watching this closely. Treating cryptocurrencies as property is consistent with how some tax rules currently describe virtual assets in tax laws, and may affect the taxation of gains and transfers in the future. This is an important decision made by the Supreme Court, which has the authority, but it can be appealed and reviewed by other courts of higher authority.

The ruling protects the XRP holdings identified in this petition. More legal battles over other users and different codes may follow.

Featured image from JSA, chart from TradingView

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