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New Delhi, Oct 26 (IANS) In a significant judgment, 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 is no doubt that cryptocurrency is an asset. It is not a tangible asset, nor is it a currency. However, it is an asset that can be enjoyed and can be held (in beneficial form). It is capable of being held in trust,” Justice N. A single-judge bench of Anand Venkatesh said.
In giving its order, the Madras High Court drew support from the apex court’s judgments in Ahmed GH Arif v. CWT and Jilubhai Nanbhai Khachar v. State of Gujarat to expand the meaning of “property” under Indian law.
“Property in the legal sense means a set of rights guaranteed and protected by law. It extends to every species of valuable right and interest…every thing which has exchangeable value or which creates wealth or property or status,” Justice Venkatesh quoted.
He also noted that cryptocurrencies fall under the definition of “virtual digital asset” under Section 2(47A) of the Income Tax Act, 1961, and are not considered as speculative transactions.
The decision came in a case where the applicant sought to protect its holding of 3,532.30 XRP coins on the WazirX platform, which was frozen following the 2024 cyber attack.
The Madras High Court recognized the applicant’s share as his property, and stayed the intervention pending the arbitration proceedings.
Justice Venkatesh said that although cryptocurrencies are “streams of 1s and 0s residing in a blockchain managed by the issuer of the cryptocurrency,” they constitute an asset that is “capable of being owned, transferred, and stored.”
“A crypto currency is not a currency strict sensu, nor can we conclude that a digital asset is an asset strict sensu,” the Madras High Court remarked, adding that India has an opportunity to design a regulatory regime that encourages innovation while maintaining consumer protection and financial stability.
Justice Venkatesh cited the New Zealand High Court’s 2020 decision in Rusco v Cryptopia Limited (in Liquidation), where the court held that cryptocurrencies are a “type of intangible asset” capable of being held on trust.
The Madras High Court quoted, “Although it is merely a series of 1’s and 0’s, it is more than mere information.”
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 vs Ho Kai Zin (2023), and the US federal courts in SEC vs Ripple Labs (2023) have all treated crypto tokens as assets 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-ranging implications on taxation, inheritance, bankruptcy and contractual enforcement involving digital assets.
–IANS
PDS/DPB