Madras High Court has ruled that cryptocurrencies can be treated as property, a decision that could reshape how exchanges handle user assets after hacks.
The court found that certain crypto holdings are identifiable and controllable, and therefore eligible for legal protection similar to other movable property.
Cryptocurrency Treated As Property Under Law
According to the Madras High Court, crypto-assets meet the basic tests of property because they can be owned, transferred and controlled by private keys.
Justice N. Anand Venkatesh said they can be held “in trust,” and that they are neither physical goods nor traditional currency but are property nonetheless.
Based on reports, the decision relied in part on the Income Tax Act’s definition of “virtual digital asset” under Section 2(47A).
WazirX Hack And The Disputed Holdings
Reports have disclosed that WazirX suffered a major security breach on July 18, 2024, when its cold wallet was compromised and about $230 million in Ethereum and ERC-20 tokens were taken.
A WazirX user who held 3,532 XRP — valued at roughly ₹1.98 lakh in January 2024 — asked the court to protect her coins from being swept into any pooled compensation arrangement for the stolen funds. The court agreed that her XRP was separate from the tokens stolen in that hack.
Court Rejects Arbitration Barrier
WazirX argued that disputes should go to arbitration in Singapore under its agreements. The court rejected that view for this case because the transactions had clear links to India — funds came from Indian bank accounts and the exchange is registered in India.
Jurisdiction was thus left with the Madras High Court, and ad-interim relief was ordered to stop the user’s XRP from being reallocated as part of the hack losses.
What This Means For Users And Exchanges
The judgment gives a stronger legal basis to individual users to challenge exchanges legally in Indian courts if they feel their funds are misrepresented or exploited.
Exchanges could be required to have a more robust record-keeping regime, clearer segregation of client funds, and direct audit trails.
According to reports, judges pointed to technical characteristics of cryptocurrencies — transferability, identifiability and exclusive control — that support the conclusion that legal ownership can be recognized.
Potential Tax And Legal Implications Ahead
Tax experts are monitoring this closely. Treating crypto as property matches the way some tax rules currently describe virtual assets in tax codes, and may influence the taxation of gains and transfers in the future. This is an important decision of a High Court, which has authority, but can be appealed and reviewed by other courts of higher authority.
The judgment protects the specific XRP holdings in this petition. Further legal fights over other users and different tokens may follow.
Featured image from JSA, chart from TradingView
