SUKUMAR SAH
In a move that could change how India views money and ownership in the digital age, the Madras High Court has ruled that cryptocurrency counts as “property” under Indian law.
What started as a simple case about a cyber hack on the WazirX exchange has turned into a landmark moment — giving India its first clear legal recognition of digital assets. With this single decision, the Court may have shifted crypto from a shadowy, speculative trade into a legitimate, accountable asset class.
For years, cryptocurrencies sat in a grey zone — neither money, commodity, nor security. Banks avoided dealing with them, and accountants had no rules for recording them.
That confusion is now fading. By declaring that crypto can be “held in trust,” the Court has effectively said it has all the qualities of property — something you can own, transfer, and value. This means companies might finally list digital assets on their balance sheets, much like patents or goodwill. It could mark the beginning of a new era in corporate accounting.
Businesses and investors now have firmer ground. Corporate treasuries that once stayed away from Bitcoin or Ethereum may consider holding small amounts as diversified assets. Venture capital funds investing in Web3 projects can take comfort that their crypto holdings have legal status and can be valued and audited. For finance chiefs and auditors, the ruling offers what the crypto world desperately needed: legal clarity and defensibility.
But with recognition comes responsibility. If crypto can be held “in trust,” then exchanges and custodians must act like trustees — protecting client assets and keeping them separate from company funds.
They will need stronger audits, better compliance, and clear user agreements stating that customers own their tokens. This essentially transforms crypto exchanges from tech start-ups into regulated financial entities. Board members could now be held personally accountable for misuse of client funds.
The ripple effects reach banks and fintechs as well. Lenders that once refused crypto-related accounts may now recognise them as valid property holdings, even if risky ones. This opens doors for new services — escrow, insured custody, and crypto-backed loans. Fintechs could design credit products using tokenised assets as collateral. The ruling doesn’t turn crypto into money, but it makes it a legitimate asset that can support financial services.
For investors and lawyers, this judgment brings predictability. Indian courts can now enforce contracts involving digital assets, making it easier to recover stolen or lost funds. Arbitration clauses for crypto disputes will hold weight. For the first time, digital property rights have legal teeth in India.
The tax system also benefits from clarity. The Income Tax Act already taxes profits from “virtual digital assets” at 30 per cent, but now this has judicial backing. Companies can classify crypto gains properly, traders can declare income from it, and auditors can value holdings consistently. Even in bankruptcies, crypto can now be treated as recoverable property — a big step for creditors.
The decision also encourages innovation in fundraising and tokenisation. If digital assets are legally recognised as property, they can be used as collateral or even be turned into tradable tokens. Indian start-ups might now tokenise equity or revenue streams, while global investors could use tokenised Indian assets as security — bringing India closer to hubs like Singapore or London.
Along with responsibility, recognition also brings new risks. Exchanges must now meet high cybersecurity standards and comply with fiduciary and data protection laws. The WazirX hack that started it all is a reminder that legal recognition doesn’t make crypto immune to theft. Crypto is now taxable, auditable, and insurable — but still vulnerable.
This judgment also puts pressure on regulators. The RBI, Sebi, and Finance Ministry can no longer ignore crypto. The RBI must clarify whether banks can hold or lend against such assets, Sebi must define its role in tokenised securities, and the Corporate Affairs Ministry must issue accounting guidelines. For once, the courts have moved faster than policymakers.
Most importantly, the psychological shift is huge. Legitimacy changes perception. What was once seen as a risky gamble now looks like a valid, ownable asset. Indian IT and fintech firms can build blockchain-based businesses — custody, settlement, or tokenisation — with confidence. Global investors may view India as a safer, more credible market for Web3 innovation.
Still, the ruling doesn’t make crypto part of the monetary system, and regulators will remain cautious. But in one bold judgment, the Madras High Court has done what the Government avoided for years — it has brought crypto into the framework of Indian property law, subject to all the duties and protections that come with real ownership.