Background:
A petition was filed under Section 9 of the Arbitration and Conciliation Act, 1996 against Zanmai Labs Pvt Ltd (operator of the crypto-exchange WazirX) for release of certain frozen crypto-tokens (3,532.30 XRP) of the applicant on account of a cyber-attack and resultant locking of the account.
While determining interim relief, the Madras High Court (MHC) addressed the question whether the crypto-tokens in issue qualify as “property” under Indian law.
The Decision:
The MHC, through a single-judge bench (Justice N. Anand Venkatesh), held that cryptocurrency is indeed “property” under Indian law:
- The bench observed that cryptocurrency is neither a “tangible” property nor traditional “currency”, but 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 emphasised that property, in the legal sense, means “an aggregate of rights which are guaranteed and protected by law. It extends to every species of valuable rights and interest… everything that has an exchangeable value or which goes to make up wealth or estate or status.”
- The court recognised that cryptocurrencies are “streams of 1s and 0s residing in a blockchain … but they constitute an asset capable of being owned, transferred and stored.”
- It also noted that crypto-assets fall within the definition of “virtual digital asset” under Section 2(47A) of the Income Tax Act, 1961 and are not to be treated as speculative transactions for tax purposes.
- The court drew on foreign precedents, such as the Ruscoe v Cryptopia Ltd (New Zealand High Court) holding that cryptocurrencies are a type of intangible property capable of being held on trust.
- In result, the court granted interim relief by recognising the applicant’s crypto‐holding as her property and restrained interference with those tokens pending further proceedings.
Legal Significance:
This ruling is significant from several legal-perspective standpoints:
- Recognition of digital assets as property:
By declaring that cryptocurrency qualifies as property, the MHC brings digital assets into the mainstream of property jurisprudence. That means rights of ownership, possession, transferability, trust arrangements, insolvency and execution may now more clearly apply to such assets. - Clarity for tax and regulatory regimes:
The observation that crypto-assets come within “virtual digital asset” under the Income Tax Act gives further clarity to tax treatment (for example how gains from transfer might be treated). It also supports the notion that these assets are not mere speculative contracts, but rights/wealth-components. - Implications for contracts, arbitration and enforcement:
Since the applicant approached the court under Section 9 arbitration regime, the finding augments the ability to treat crypto-assets as subject-matter of contracts, arbitration claims, attachments, interim relief etc. In other words, if crypto-assets are property, they may be subject to court orders, injunctions, trusts and security interests. - Scope in insolvency and creditor claims:
If cryptocurrencies qualify as property, in insolvency contexts (e.g., under the Insolvency and Bankruptcy Code, 2016) they may be treated as assets of a debtor. Creditors may have claims over them, trustees/liquidators may manage them, etc. The decision opens that possibility.
Practical Legal Implications and Analytical Takeaways:
Recognising cryptocurrency as “property” firmly positions such digital assets within established Indian private law frameworks. The decision reinforces that holders of crypto-tokens have legally protectable proprietary rights which can be asserted before courts and arbitral tribunals. Given that the ruling arose from a Section 9 proceeding, the judgment establishes that crypto-assets can be the subject of interim protection in arbitration, including injunctions against transfer, unauthorised access, or diminution of value. The ruling further aligns judicial reasoning with India’s fiscal approach under the Income Tax Act, 1961, where virtual digital assets are already recognised as a taxable asset class. This reduction in classification ambiguity supports more coherent treatment of crypto-assets in commercial transactions and disputes. Beyond this, property recognition enhances clarity in areas such as restitution, enforcement, and asset recovery, particularly in cybercrime, fraud, and misappropriation matters involving digital wallets and exchanges. It may also guide courts when dealing with ownership evidence, custodial responsibilities of exchanges, and competing claims over digital tokens. The Court’s reliance on international jurisprudence signals an effort to harmonise Indian legal doctrine with emerging global standards in digital property rights. Notably, the judgment does not address regulatory categorisation (e.g., whether crypto qualifies as currency, security, or commodity under sectoral laws), nor does it pronounce on supervisory jurisdiction over exchanges. These remain dependent on future legislative or regulatory developments. However, by rooting cryptocurrency firmly within the definition of property, the Court has provided an immediate and actionable legal foundation for asserting rights, obtaining legal protection, and resolving disputes concerning digital assets.
Conclusion:
In summary, the Madras High Court’s decision marks a significant milestone in the Indian legal treatment of cryptocurrencies. By formally recognising crypto-tokens as “property”, capable of ownership, possession and trust. The court has brought them within the ambit of established property jurisprudence. This has wide-ranging implications for contract law, arbitration, insolvency, regulatory design and taxation in India.
For legal practitioners, businesses, investors and regulators the key take-away is that digital assets can no longer be treated as purely speculative or outside the legal property regime—they now bear the hallmarks of an asset class with enforceable rights. Going forward, alignment of contracts, transactional frameworks, dispute resolution strategies and tax/structuring work with this understanding will be critical.
