In a historic judgment that could reshape the future of cryptocurrency regulation in India, the Madras High Court has officially declared XRP and other digital assets as property under Indian law. The decision, issued by Justice N. Anand Venkatesh, not only supports investor protection but also sets a strong legal foundation for recognizing cryptocurrencies as assets with tangible ownership rights.
The ruling comes amid a long-standing dispute between an XRP investor and the Indian crypto exchange WazirX, following a large-scale cyberattack that cost users millions in digital assets. The court’s decision clarifies how Indian law perceives cryptocurrencies and highlights the growing need for accountability among exchanges operating in the country.
Madras High Court Recognizes XRP as Property
Justice Venkatesh’s verdict officially recognizes XRP and other cryptocurrencies as a form of “property” under Section 2(47A) of the Income Tax Act, 1961. This section defines virtual digital assets, giving them a legal identity similar to movable property. The court stated that cryptocurrencies are “recognizable, movable, and manageable through private keys,” which makes them a unique type of digital property.
This ruling marks a pivotal moment for India’s crypto community, providing clarity on the legal standing of digital assets. Investors now have a stronger claim of ownership and protection under Indian law, which could influence how future cases involving crypto disputes are handled.
Background of the Case: The WazirX Hack
The case stemmed from a cyberattack on the WazirX exchange, operated by Zanmai Labs Pvt. Ltd. In January of the previous year, an Indian investor purchased 3,532.30 XRP coins worth around ₹1,98,516. However, in July, the platform suffered a massive security breach, resulting in the loss of approximately $230 million worth of Ethereum and ERC-20 tokens.
Following the incident, WazirX froze multiple user accounts, including the investor’s, claiming the move was necessary to contain the damage. Although the exchange later resumed deposit services, many users continued to report that their funds remained inaccessible.
The investor filed a petition arguing that her XRP holdings were separate from the stolen Ethereum-based assets. She maintained that the XRP tokens were held in trust by WazirX and sought legal protection under Section 9 of the Arbitration and Conciliation Act, 1996.
WazirX’s Defense and Jurisdictional Argument
WazirX’s operator, Zanmai Labs, countered the petition by claiming that its Singapore-based parent company, Zettai Pte Ltd, was under an order from a Singapore court. The order required all users to share losses resulting from the hack. Based on this, WazirX argued that the matter fell under Singaporean jurisdiction, not Indian.
Justice Venkatesh, however, rejected this claim, emphasizing that the investor’s transaction was linked to an Indian bank account and thus subject to Indian jurisdiction. He stated that Indian courts have the authority to protect assets located within the country, even if arbitration agreements involve foreign jurisdictions.
This decision not only reinforced the investor’s right to seek justice in India but also set a precedent for other crypto-related disputes involving international platforms operating in the country.
XRP Holdings Not Affected by the Hack
The court carefully analyzed the details of the cyberattack and concluded that the XRP holdings in question were not affected by the breach. Justice Venkatesh clarified that the hack primarily targeted Ethereum-based tokens, and therefore, the investor’s XRP assets remained intact.
He further emphasized that cryptocurrencies in India should not be treated as speculative assets but as digital property with quantifiable ownership rights. This distinction could have far-reaching implications for taxation, investor security, and the broader acceptance of virtual assets in India’s financial system.
Strengthening Legal Recognition of Digital Assets
By defining cryptocurrencies as property, the Madras High Court has provided a much-needed layer of legitimacy for crypto investors and businesses in India. This move aligns with the government’s recent stance on classifying crypto transactions under taxable digital asset categories.
The verdict signals a shift toward integrating cryptocurrencies within existing legal frameworks rather than treating them as unregulated entities. It also encourages investors to seek legal recourse when disputes arise, rather than relying solely on exchange policies or foreign arbitration.
Court Calls for Improved Crypto Governance
Justice Venkatesh also issued a strong message to the crypto industry, stressing the need for improved corporate governance and accountability. He pointed out that Zanmai Labs, the operator of WazirX, is registered with the Financial Intelligence Unit (FIU) in India, which gives it the authority to offer crypto-related services in the country.
The judge emphasized that crypto exchanges must adopt similar governance and compliance standards as traditional financial institutions. This includes separating client funds from company assets, allowing independent audits, and ensuring strict Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures.
According to Justice Venkatesh, the Indian judiciary now plays a vital role in shaping the country’s digital economy. By recognizing the rights and duties associated with virtual assets, courts are contributing to the evolution of a more secure and transparent crypto ecosystem.
Implications for India’s Crypto Future
The ruling has significant implications for both crypto investors and platforms in India. For investors, it reinforces the idea that their digital holdings have legal protection similar to traditional assets. For exchanges, it signals that non-compliance and poor governance will no longer be tolerated under Indian law.
Moreover, this decision comes at a time when global debates around XRP’s regulatory status continue, particularly in the United States, where Ripple Labs has faced ongoing scrutiny from the SEC. The Indian court’s recognition of XRP as property could bolster Ripple’s position as a legitimate asset within the global financial landscape.
As India’s digital asset market matures, rulings like this will likely serve as guiding precedents for future legislation. The emphasis on property rights, jurisdictional clarity, and compliance underscores India’s gradual move toward a regulated and investor-friendly crypto environment.
Justice Venkatesh’s ruling not only delivers justice to the affected investor but also strengthens the foundation for digital asset recognition across India. It marks a critical step in the ongoing evolution of India’s approach to cryptocurrencies—balancing innovation with legal accountability and investor protection.
Post Views: 54
