A recent ruling by the Madras High Court in India has become a watershed for cryptocurrency. In the case of the crypto exchange WazirX and its operator Zanmai Labs, it observed that cryptocurrency is to be treated as ‘property’ and hence can be acquired, inherited, and transferred no differently from shares, art, or real estate, rather than just viewed as a digital curiosity or speculative gamble.
A Legal Showdown in the World of Digital Coins
The dispute began when one investor, who had more than 3,500 XRP coins on WazirX, found her holdings caught up in a proposed loss-sharing plan after a $235 million hack. The exchange suggested pooling everyone’s assets to cover the loss. The investor challenged this, saying her particular coins never formed any part of the theft and should not be diluted.
In its ruling, the Madras High Court amply clarified that it will treat cryptocurrency as property, a thing capable of ownership and enjoyment. It further clarified that exchanges and intermediaries owe fiduciary duties—that is, they are obliged to act responsibly and in the best interests of users, rather than as mere neutral platforms.
A Turning Point in Digital Asset Law
This view of cryptocurrency as property will have far-reaching implications for investors.
- Increases protection for investors.
Essentially, by declaring custody of crypto funds as possession, the court has aligned crypto investors (who usually felt they were at a loss when their funds were hacked or the exchange went under) with any property holder whose property was wrongfully taken. They now have available remedies under property law whereby they can seek compensation for the return of their property.
- Estate and Tax Impact
Recognizing crypto as property also provides clarity on inheritance, gifting, and tax reporting. In India, crypto gains are already subject to 30% taxation, yet the decision reinforces the idea that this part of an individual’s wealth is legally recoverable.
A Global Ripple Effect
Although this ruling applies only in India, it could influence thinking elsewhere. Globally, courts and regulators are wrestling with the question of how to treat digital assets. UK investors should take the decision as a reminder that the legal environment is increasingly catching up with technological reality. Many jurisdictions in the world already consider cryptography a form of property. Previously, the UK High Court has made similar observations and imposed freezing orders on cryptocurrencies.
Takeaway
The Madras High Court’s decision demonstrates an increasing level of acceptance and respect for digital assets as a legitimate form of property. This adds a level of security for the investor, accountability by the exchanges, and perhaps even a little more legitimacy to crypto as an asset class. However, cryptocurrency is inherently risky, and the law is slow to catch up or is still there. Whether it’s India, the UK, or somewhere else, your safest course would be to use reputable platforms, keep records of your holdings, and stay informed about evolving laws that affect your digital wealth.
Building a Common Digital Finance Identity Across Borders
At the Commonwealth Union, we believe the true potential of finance and technology lies in their ability to connect and collaborate across borders.
With this in mind, we are building strategic alignments between governments, financial institutions, and technology innovators through our dedicated Blockchain Network. The purpose of this initiative is to facilitate greater international coordination, new cross-border potential, and focused investment flows into the places where they can make the most impact.
True to this vision, we are poised to launch a Digital Banking Network—a network that will render financial services more inclusive and accessible across the Commonwealth and MENA regions.
If you are keen to learn more or our mission resonates with you, we would love to connect. Please feel free to contact us at Info@commonwealthdigitalbankingclub.com
