Madras High Court has ruled that cryptocurrencies can be treated as property, a decision that could reshape how exchanges handle user assets after hacks.
According to the Madras High Court, crypto-assets meet the basic tests of property because they can be owned, transferred and controlled by private keys.
Justice N. Anand Venkatesh said they can be held “in trust,” and that they are neither physical goods nor traditional currency but are property nonetheless.
Reports have disclosed that WazirX suffered a major security breach on July 18, 2024, when its cold wallet was compromised and about $230 million in Ethereum and ERC-20 tokens were taken.
A WazirX user who held 3,532 XRP — valued at roughly ₹1.98 lakh in January 2024 — asked the court to protect her coins from being swept into any pooled compensation arrangement for the stolen funds. The court agreed that her XRP was separate from the tokens stolen in that hack.
Jurisdiction was thus left with the Madras High Court, and ad-interim relief was ordered to stop the user’s XRP from being reallocated as part of the hack losses.
The judgment gives a stronger legal basis to individual users to challenge exchanges legally in Indian courts if they feel their funds are misrepresented or exploited.
Exchanges could be required to have a more robust record-keeping regime, clearer segregation of client funds, and direct audit trails.
Tax experts are monitoring this closely. Treating crypto as property matches the way some tax rules currently describe virtual assets in tax codes, and may influence the taxation of gains and transfers in the future. This is an important decision of a High Court, which has authority, but can be appealed and reviewed by other courts of higher authority.
The judgment protects the specific XRP holdings in this petition. Further legal fights over other users and different tokens may follow.
Featured image from JSA, chart from TradingView
