In a landmark judgment, the Madras High Court has recognised cryptocurrency as “property” under Indian law, clarifying that digital assets—though intangible—can be owned, transferred, and legally protected.
The case arose from a dispute involving a cryptocurrency exchange where an investor’s digital assets were frozen following a cyberattack. The court ruled that cryptocurrencies, being identifiable and valuable, fit within the legal definition of “property,” granting the investor protection under Indian statutes.
Key Highlights of the Judgment
The Court stated that cryptocurrencies are not legal tender, but are intangible property that can be enjoyed, possessed, or held in trust.
It cited Indian legal precedents that interpret “property” broadly, encompassing all valuable rights and interests, even if intangible.
The ruling emphasized that crypto assets are capable of ownership, thereby deserving of protection from wrongful interference.
The judgment strengthens the legal standing of Virtual Digital Assets (VDAs), which are already recognized under the Income Tax Act, 1961 for taxation purposes.
Implications of the Ruling
For Investors
This judgment gives investors a stronger legal footing to assert ownership rights over their digital assets. In the event of fraud, hacking, or exchange disputes, crypto holders can now seek protection similar to property disputes.
For Exchanges
Crypto platforms operating in India must treat user holdings as custodial property, ensuring segregation of user and company assets. Mishandling user assets could invite property-law liability.
For Regulators
The decision provides a clearer basis for the legal treatment of crypto assets. Regulators may now align taxation, inheritance, and asset protection laws around this interpretation, paving the way for structured digital-asset governance in India.
📊 Impact on Indian Crypto Ecosystem
The ruling arrives at a crucial time as India continues to refine its stance on cryptocurrencies. While the RBI maintains restrictions on recognizing crypto as legal tender, the property classification bridges the gap between outright prohibition and regulatory acceptance.
Experts believe this clarity may attract greater institutional participation, as digital assets now enjoy legal acknowledgment as intangible property under Indian jurisprudence.
✅ What Crypto Holders Should Do
Maintain documentation — Keep transaction records and wallet proofs for legal and tax purposes.
Verify exchange compliance — Use registered platforms that follow FIU-IND and AML guidelines.
Stay informed on tax laws — Gains and transfers from crypto are taxable as per Virtual Digital Asset rules.
Use secure storage — Retain personal control of private keys wherever possible.
❓ FAQs
1. Does this mean cryptocurrency is now legal in India?
The court recognized cryptocurrency as property, not as legal tender. This means it can be legally owned and protected but cannot be used as official currency for transactions.
2. What does treating crypto as “property” change for investors?
Investors now have a clear legal claim to ownership and protection of their digital assets. They can pursue remedies under property law in cases of loss, theft, or breach of trust.
3. Will this affect how crypto is taxed in India?
Yes. Since crypto is already taxed as a Virtual Digital Asset, this ruling further solidifies its classification as an asset rather than speculative income or illegal tender.
4. Can crypto be included in wills or inherited property?
Potentially yes. As property, crypto assets can form part of a person’s estate. This opens up discussions around succession planning and inheritance taxation for digital assets.
5. Does this mean exchanges have more legal responsibility now?
Absolutely. Exchanges must handle user crypto holdings with fiduciary care—like custodians of someone else’s property. Any misappropriation could now attract property-law penalties.
Published on : 27th October
Published by : SMITA
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