Indian Court Rules Crypto Is Protected Property

In a groundbreaking decision that could reshape India’s digital asset landscape, the Madras High Court ruled Friday that cryptocurrencies constitute property protected under constitutional law. Justice N. Anand Venkatesh specifically blocked WazirX, India’s largest crypto exchange, from reallocating user assets under its Singapore restructuring plan, granting an injunction protecting 3,532 XRP tokens belonging to a customer unaffected by the July 2024 hack that drained $234 million from the platform.

The judge’s ruling provided crucial legal clarity, stating that while cryptocurrency “is not a tangible property nor is it a currency, it is a property, which is capable of being enjoyed and possessed in a beneficial form.” This establishes that crypto assets held in exchange custody must be treated as client property held in trust, granting legal standing to digital assets as property capable of ownership and protection under Indian law. The decision also affirmed that crypto assets accessed within India fall under Indian court protection, regardless of an exchange’s foreign jurisdiction claims.

Central to the case was WazirX’s proposed “socialization of losses” plan, which would have spread the $234 million hack losses proportionally across all users. Justice Venkatesh rejected this scheme, comparing it to “a group insurance of a self-help group” and ruling that “the basis of such a proposition is not any term in the contractual framework between the parties,” making it unenforceable against Indian users.

The court also dismissed WazirX’s argument that its Singapore court-approved restructuring automatically binds Indian users, asserting the primacy of Indian jurisdiction over assets accessed within the country. This rejection follows a similar Bombay High Court decision against Bitcipher Labs’ loss-sharing measures, creating a consistent judicial stance against exchanges attempting to distribute hack losses across their user base. The ruling came on the same day WazirX restarted operations with 95.7% creditor approval, though users have reported receiving only 30% of expected funds amid locked accounts and verification delays.

Legal experts hailed the decision as foundational “crypto-jurisprudence” that strengthens consumer protection for crypto-holders and paves the way for clearer regulatory frameworks. Sudhakar Lakshmanaraja, founder of Digital South Trust, told Decrypt that “this clarity is very helpful: it strengthens consumer protection for crypto-holders, affirms their rights as asset owners, and paves the way for clearer regulatory and fiduciary frameworks in the crypto ecosystem in India.”

Vikram Subburaj, CEO of Indian crypto exchange Giottus, emphasized that “together, these judgments stand among the first major Indian court decisions on cryptocurrency issues” and send signals “that the high-tech arena will be held to high standards of governance and protection.” The ruling adds to a growing body of Indian crypto jurisprudence that defines user protections amid the government’s slow regulatory progress, creating what Justice Venkatesh described as courts becoming “the central stage where the future of digital value is debated.”

The decision highlights the current lopsided nature of India’s crypto policy, which imposes strict revenue collection measures including a 30% levy and 1% TDS but remains silent on investor rights or asset ownership rules. As Justice Venkatesh noted, “Through each ruling, they are shaping a clearer picture of rights, responsibilities, and trust in the age of decentralization,” suggesting that courts are filling the regulatory vacuum until comprehensive legislation emerges.