Honourable Justice N. Anand Venkatesh, Madras High CourtTL;DR
- Madras High Court has officially recognised cryptocurrency as “property” under Indian law, allowing it to be owned, possessed, and held in trust.
- The ruling arose from a case involving frozen XRP tokens on WazirX, highlighting investor rights amid cyber-attacks and platform restructuring.
- The Court established that crypto exchanges owe a fiduciary duty to users, meaning they must safeguard and segregate client assets.
- This decision sets a legal precedent for India’s crypto regulation, reinforcing investor protection and shaping the country’s digital asset ecosystem.
In a landmark judgment delivered on 25 October 2025, the Madras High Court has officially classified cryptocurrency as “property” under Indian law, marking a pivotal moment for India’s evolving digital asset ecosystem. The decision, delivered by Justice N. Anand Venkatesh, clarifies that while cryptocurrency is neither a tangible property nor a legal tender, it qualifies as a form of property capable of being owned, possessed, and held in trust. This ruling, arising from a case involving frozen XRP coins on the WazirX platform, significantly impacts how digital assets are treated legally in India.
Background: The Case That Sparked the Debate
The case originated when an investor filed an application under Section 9 of the Arbitration and Conciliation Act, 1996, alleging that her 3,532.30 XRP coins were wrongfully frozen following a cyber-attack on WazirX, a cryptocurrency exchange operated by Zanmai Labs Pvt. Ltd. The applicant had initially invested ₹1,98,516 in January 2024, and by January 2025, the value of her holdings had grown to approximately ₹9,55,148.
The problem arose after WazirX announced a cyber-attack on one of its cold wallets in July 2024, resulting in a loss of Ethereum and ERC-20 tokens worth $230 million. Following the breach, several user accounts, including that of the applicant, were frozen. This led to the investor being unable to access, trade, or liquidate her XRP holdings.
The Platform’s Complex Corporate Web
WazirX’s corporate structure has long been a point of contention. Initially operated by Binance through a licensing agreement with Zanmai Labs, the platform’s operations became increasingly opaque after Binance terminated its support in January 2023. Subsequently, Zettai Pte. Ltd., Singapore-based original owner of WazirX, assumed custody of the digital assets and engaged Liminal Custody to manage its wallets.
In July 2024, Liminal suffered a cyber-attack that resulted in losses exceeding $234 million. To address the financial shortfall, Zettai initiated restructuring proceedings in Singapore and proposed a “scheme of arrangement” under the Singapore Companies Act. The scheme, approved by the Singapore High Court on 13 October 2025, involved asset transfers and offered investors limited withdrawal options. WazirX argued that the applicant would be compensated on a pro-rata basis under this scheme.
Jurisdictional and Legal Arguments
The company contested the Madras High Court’s jurisdiction, claiming that the user agreement designated Singapore as the seat of arbitration. However, the applicant contended that part of the cause of action arose in Chennai, where she used the platform and transferred funds from an Indian bank account. The Court concurred, holding that the applicant’s use of WazirX from within India established sufficient territorial nexus for jurisdiction.
The Court further noted that the applicant’s XRP holdings were distinct from the assets affected by the cyber-attack, which involved ERC-20 tokens. This distinction formed a crucial element of the judgment.
Court’s Observations: Defining Cryptocurrency Under Indian Law
Justice Venkatesh’s ruling provides rare judicial clarity on how cryptocurrencies should be legally viewed in India. The Court stated:
“There can be no doubt that crypto currency is a property. It is not a tangible property nor is it a currency. However, it is a property, which is capable of being enjoyed and possessed (in a beneficial form). It is capable of being held in trust.”
The Court emphasized that cryptocurrencies are virtual digital assets under Section 2(47-A) of the Income Tax Act, 1961, and not speculative instruments. It drew reference from the Supreme Court’s decision in Internet & Mobile Association of India v. RBI (2020), which had earlier struck down the Reserve Bank of India’s 2018 circular banning banking support to crypto exchanges.
Fiduciary Responsibility of Exchanges
In aligning with the Bombay High Court’s reasoning in Zanmai Labs Pvt. Ltd. v. Bitcipher Labs LLP, the Madras High Court underscored that exchanges hold cryptocurrencies in trust for users, thereby establishing a fiduciary duty. This means that exchanges cannot arbitrarily freeze, redistribute, or socialise user losses without due process.
The Court remarked that “virtual digital assets held electronically were meant to be held in trust with a fiduciary duty owed to their owners,” a stance that redefines the relationship between investors and platforms.
Interim Protection and Relief Granted
After reviewing the submissions, the Court granted interim protection to the applicant under Section 9 of the Arbitration and Conciliation Act. WazirX’s Indian entity was directed to either furnish a bank guarantee of ₹9,56,000 in favour of the applicant or deposit the same amount into an escrow account. This protection will continue until the arbitration process concludes.
The Court noted that although the applicant had not issued a trigger notice earlier, the delay was justified due to pending proceedings in Singapore. With the Singapore High Court’s approval of the restructuring scheme, the applicant’s position was now clarified, paving the way for further legal recourse.
Broader Implications for India’s Crypto Ecosystem
This judgment carries far-reaching implications for India’s digital asset industry. By recognizing cryptocurrency as property, the Court has extended investor protections comparable to those governing traditional financial assets. The ruling reinforces the need for crypto exchanges to maintain segregation of client funds, ensure transparency, and register as reporting entities under the Financial Intelligence Unit (FIU).
Legal experts suggest that the ruling could shape the future of digital asset regulation in India. “By treating crypto assets as property, courts are setting the foundation for how ownership rights, custodianship, and fiduciary responsibilities will evolve in the Web3 economy,” observed a senior legal analyst.
Edul Patel, CEO of Mudrex, welcomed the decision, stating, “Before this judgment, investors had limited recourse when platforms froze accounts or misappropriated funds, with many cases being dismissed on grounds of jurisdiction or regulatory ambiguity,” he said to NDTV.
Setting a Precedent for Investor Protection
The Madras High Court’s decision not only offers interim relief to one investor but also signals a shift in the judicial perception of digital assets. It empowers users to seek legal recourse against wrongful asset freezes or exchange mismanagement and ensures that cyber-attack losses cannot be arbitrarily socialised.
The Court highlighted that Indian courts are increasingly becoming the “central stage where the future of digital value is debated.” Each ruling, it said, is shaping a clearer picture of rights and responsibilities in an age of decentralised finance.
Conclusion
The Madras High Court’s recognition of cryptocurrency as property marks a defining chapter in India’s legal treatment of virtual assets. By granting interim protection and reaffirming fiduciary duties, the Court has strengthened investor confidence and set a robust legal precedent for future disputes involving digital currencies.
As India continues to refine its digital asset regulations, this ruling serves as a crucial reference point—bridging the gap between innovation and investor protection while reaffirming that even in the decentralised world of crypto, the rule of law prevails.
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