Major Ruling: Indian Court Declares Crypto Property in WazirX XRP Case

In a major decision for India’s digital asset sector, the Madras High Court has ruled that cryptocurrencies qualify as property under Indian law, a move that could redefine the legal standing of crypto investors nationwide.

The judgment, issued Friday by Justice N. Anand Venkatesh, prevents WazirX, India’s largest cryptocurrency exchange, from reallocating a user’s XRP holdings as part of its post-hack restructuring plan. The case centered on 3,532 XRP tokens belonging to an individual investor whose funds were untouched by the exchange’s July 2024 security breach that drained approximately $234 million.

Crypto as Property — Not Currency, But Protected

Justice Venkatesh’s order explicitly recognized digital tokens as “property capable of being enjoyed and possessed in a beneficial form,” granting them fiduciary protection under existing property law.

“It is not a tangible property nor is it a currency,” the judge wrote. “However, it is a property, which is capable of being enjoyed and possessed in a beneficial form.”

This classification means crypto assets must be treated as client property held in trust by exchanges, a significant development in a country still without a comprehensive regulatory framework for digital assets.

A Blow to WazirX’s ‘Socialization of Losses’ Plan

WazirX had attempted to “socialize” the losses from its 2024 hack, proposing to distribute the damage proportionally across all users. The High Court rejected the idea, describing it as akin to “a group insurance of a self-help group,” and found no contractual basis that would allow the exchange to impose such a measure on Indian customers.

The court further dismissed WazirX’s claim that its Singapore restructuring, approved overseas, should automatically apply to Indian users.

“This clarity is very helpful: it strengthens consumer protection for crypto-holders, affirms their rights as asset owners, and paves the way for clearer regulatory and fiduciary frameworks in the crypto ecosystem in India,” said Sudhakar Lakshmanaraja, founder of Digital South Trust.

A Foundation for India’s Crypto Jurisprudence

Legal experts are calling the verdict a foundational moment in India’s emerging crypto jurisprudence.

“These are among the first major Indian court decisions defining cryptocurrency rights and responsibilities,” said Vikram Subburaj, CEO of Giottus, another Indian exchange. “It sends a strong message that even in high-tech sectors, principles of governance and protection will be enforced.”

The case also builds on earlier decisions, including a Bombay High Court ruling that similarly rejected loss-sharing models proposed by other exchanges, highlighting the judiciary’s growing role in shaping crypto accountability in the absence of clear legislative direction.

Regulatory Gaps and the Road Ahead

While the ruling bolsters investor protection, India’s broader crypto policy remains uneven. The government enforces a strict 30% tax on crypto income and a 1% transaction levy, but it has yet to define ownership rights or custodial obligations for exchanges.

WazirX, which recently resumed operations after securing 95.7% creditor approval for its restructuring plan, continues to face user frustration over limited fund recoveries. Many customers report accessing only about 30% of their assets amid ongoing withdrawal restrictions.

In his concluding remarks, Justice Venkatesh emphasized the judiciary’s evolving role in navigating digital asset disputes:

“Ultimately, courts have become the central stage where the future of digital value is debated,” he wrote. “Through each ruling, they are shaping a clearer picture of rights, responsibilities, and trust in the age of decentralization.”