Cryptocurrency 'property' under Indian law, capable of ownership and trust: Madras HC

New Delhi, Oct 26 (IANS) In a significant ruling, the Madras High Court has held that cryptocurrency qualifies as “property” under Indian law, an asset capable of being owned, enjoyed, and held in trust.

“There can be no doubt that cryptocurrency 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,” observed a single-judge Bench of Justice N. Anand Venkatesh.

Delivering its order, the Madras High Court drew support from apex court verdicts in Ahmed G.H. Ariff vs CWT and Jilubhai Nanbhai Khachar vs State of Gujarat cases to expand the meaning of “property” under Indian law.

“Property in the legal sense means an aggregate of rights which are guaranteed and protected by law. It extends to every species of valuable right and interest… everything that has an exchangeable value or which goes to make up wealth or estate or status,” quoted Justice Venkatesh.

He also noted that cryptocurrency falls within the definition of a “virtual digital asset” under Section 2(47A) of the Income Tax Act, 1961, and is not treated as a speculative transaction.

The ruling came in a case where the applicant sought protection of her holdings of 3,532.30 XRP coins on the WazirX platform, which had been frozen following a 2024 cyberattack.

The Madras High Court recognised the applicant’s holdings as her property, restraining interference pending arbitration proceedings.

Justice Venkatesh observed that although cryptocurrencies are “streams of 1s and 0s residing in a blockchain managed by the issuer of the cryptocurrency,” they constitute an asset “capable of being owned, transferred and stored”.

“Crypto currency is not a currency stricto sensu, nor can we jump to the conclusion that a digital asset is an asset stricto sensu,” the Madras High Court remarked, adding that “India has the opportunity to design a regulatory regime that encourages innovation while protecting consumers and maintaining financial stability.”

Justice Venkatesh cited a 2020 decision of the New Zealand High Court in Ruscoe vs. Cryptopia Ltd (in Liquidation), where the court held that cryptocurrencies are a “type of intangible property” capable of being held on trust.

“Although it is only a series of 1s and 0s, it is more than mere information,” the Madras High Court quoted.

The order comes amid similar judicial recognition across jurisdictions -- the UK High Court in AA vs. Persons Unknown (2019), the Singapore High Court in ByBit Fintech Ltd v. Ho Kai Xin (2023), and the US federal courts in SEC vs. Ripple Labs (2023) have all treated crypto tokens as property or commodities.

With this judgment, the Madras High Court has provided much-needed clarity on the legal status of cryptocurrencies in the country, which could have wide implications for taxation, inheritance, insolvency, and contractual enforcement involving digital assets.

--IANS

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