India’s Madras High Court Declares XRP as Legal Property in Landmark Ruling: A New Precedent for Crypto Asset Protection
Introduction
In a groundbreaking decision with far-reaching implications for cryptocurrency regulation and user rights, India’s Madras High Court has formally recognized XRP as legal property. The ruling, delivered by Justice N Anand Venkatesh on October 25, barred the exchange WazirX from reallocating or redistributing 3,532.30 XRP coins belonging to a user named Rhutikumari, who had purchased the assets by transferring funds from her bank account in Chennai. The court determined that cryptocurrency qualifies as property under Indian law, establishing a critical precedent that could reshape how exchanges handle user assets during insolvency or restructuring proceedings, not only in India but across multiple jurisdictions.
This decision marks a significant step in aligning India’s judicial approach with other major jurisdictions like the United States, United Kingdom, and Singapore, where courts have increasingly treated digital assets as property for remedial and protective purposes. By framing crypto holdings as distinct property rights rather than unsecured contractual claims, the Madras High Court has reinforced user protections and clarified jurisdictional authority over domestically accessed and funded assets, regardless of where an exchange’s corporate restructuring may be seated.
The Case: Rhutikumari vs. WazirX
Background and Key Arguments
The case centered on Rhutikumari, who purchased 3,532.30 XRP coins through WazirX by transferring funds from her Chennai-based bank account. When WazirX faced financial distress following a hack that halted withdrawals, the exchange argued that user compensation would be managed through a three-step process supervised by the Singapore High Court as part of a restructuring scheme. WazirX contended that the Madras High Court lacked jurisdiction because the arbitration was seated in Singapore and emphasized that the platform does not own crypto wallets, implying that users’ assets were part of a pooled arrangement.
However, Justice Venkatesh rejected these arguments, asserting that Rhutikumari’s actions—transferring funds from India and accessing the platform from within the country—established that part of the cause of action arose within the Madras High Court’s territorial jurisdiction. The court granted an interim injunction preventing WazirX from reallocating, apportioning, or redistributing Rhutikumari’s XRP holdings, effectively treating them as her exclusive property.
The Ruling: Cryptocurrency as Property
Justice Venkatesh explicitly stated that “cryptocurrency is treated as a virtual digital asset, and it is not treated as a speculative transaction.” The ruling cited Section 2(47A) of India’s Income Tax Act, which governs virtual digital assets, and found that cryptocurrency “is capable of being enjoyed and possessed (in a beneficial form) and is capable of being held in trust.” This characterization frames crypto assets as enforceable property interests rather than speculative instruments or unsecured claims, providing a stronger legal foundation for user protection in disputes involving exchanges.
Jurisdictional Clarity: Local Access Trumps Foreign Restructuring
WazirX’s Jurisdictional Challenge
A central issue in the case was whether Indian courts had authority over assets held by an exchange undergoing restructuring in Singapore. WazirX argued that the Singapore High Court-supervised scheme should control the matter, reflecting a common challenge in cross-border crypto disputes where exchanges operate across multiple jurisdictions. The exchange’s position highlighted the tension between local user protection and international corporate procedures.
Court’s Assertion of Territorial Jurisdiction
Justice Venkatesh firmly rejected WazirX’s jurisdictional challenge, noting that because Rhutikumari funded her account from India and accessed the platform domestically, the Madras High Court had territorial jurisdiction. This aspect of the ruling underscores that Indian courts will assert authority over crypto transactions initiated within the country, even if exchanges are incorporated or undergoing proceedings abroad. It sets a precedent for other jurisdictions to prioritize local user rights in similar scenarios, potentially limiting the ability of exchanges to shield assets through foreign restructuring schemes.
Comparative Analysis: How Other Jurisdictions Treat Crypto as Property
United States: Variable Classifications with Remedial Consistency
In the United States, courts routinely treat cryptocurrency as property for remedial purposes, such as issuing temporary restraining orders (TROs) or authorizing seizures under civil forfeiture statutes. For example, New York state courts have issued TROs over stolen USDC in cases like LCX and authorized service by NFT. Federal courts freeze wallets and seize crypto under Rule 65. However, regulatory classifications vary by agency—the SEC views some tokens as securities, while the IRS treats them as property for tax purposes.
A critical factor in U.S. cases is the contractual structure between users and exchanges. In platforms where terms of service transfer title—such as in “Earn” or yield programs—users may be classified as unsecured creditors in insolvency proceedings, as seen in the Celsius Earn ruling. This contrasts with proper custody arrangements where platforms act as bailees, offering stronger asset protection.
United Kingdom: Established Property Framework with Cross-Border Reach
English courts have consistently recognized cryptocurrency as property, granting proprietary injunctions, freezing orders, and Bankers Trust disclosure orders against exchanges, including those based overseas. The framework was established in AA v Persons Unknown, a Bitfinex ransomware case, and applied in Fetch.ai v Persons Unknown involving Binance. In LMN v Bitflyer, courts confirmed that disclosure orders could reach foreign exchanges.
Following the Law Commission’s 2023 report, Parliament is moving to codify digital-asset property concepts, solidifying the legal foundation for such orders and enhancing customer protections.
Singapore: Strong Property and Trust Doctrines
Singapore’s High Court has granted proprietary and worldwide freezing injunctions over stolen crypto in cases like CLM v CLN and recognized NFTs and tokens as property. In Bybit v Ho Kai Xin, the court confirmed that crypto can be held on trust, a doctrine relevant when users claim an exchange holds assets on their behalf. Quoine v B2C2 was among the first cases to highlight trust issues in exchange settings.
While Singapore strongly affirms crypto as property, final outcomes still depend on factual circumstances and contractual terms, similar to other jurisdictions.
Implications for Exchanges and Users in Insolvency Scenarios
Shift from Pooling Schemes to Individual Property Rights
The Madras ruling challenges the common practice of exchanges pooling user assets during insolvency or restructuring. By declaring that crypto purchases create enforceable property interests, the decision may limit how platforms redistribute holdings in financial distress. Users like Rhutikumari can now assert direct ownership claims over their specific assets, rather than being treated as unsecured creditors entitled only to pro rata compensation.
Enhanced User Protections and Legal Recourse
This ruling empowers users by providing clearer legal pathways to protect their assets. Exchanges operating in India must now ensure that user holdings are segregated and not commingled with operational funds or other users’ assets. The decision also reinforces that local courts will intervene to safeguard domestically accessed assets, increasing accountability for platforms with cross-border operations.
Broader Market and Regulatory Impact
Alignment with Global Trends
The Madras High Court’s decision aligns India with jurisdictions that prioritize property rights in crypto regulation. This consistency may foster greater institutional confidence and regulatory clarity, encouraging more structured oversight of digital assets. It also highlights a global trend toward treating crypto as property for remedial purposes, even amid varying regulatory classifications.
Potential Influence on Pending Legislation
India has been evaluating comprehensive cryptocurrency regulation, including potential bans or strict oversight. This ruling could influence legislative discussions by emphasizing the need to recognize crypto as property formally. Such recognition would provide a foundation for consumer protection laws, tax guidelines, and insolvency protocols specific to digital assets.
Conclusion: A Step Toward Mature Crypto Asset Governance
The Madras High Court’s declaration that XRP is legal property represents a milestone in cryptocurrency jurisprudence, strengthening user rights and setting a persuasive precedent for other courts globally. By asserting jurisdiction over domestically accessed assets and framing crypto holdings as trust property, the decision challenges exchanges to adopt more transparent and user-centric custody practices.
For market participants, this ruling underscores the importance of understanding jurisdictional nuances and contractual terms when engaging with crypto platforms. As regulatory frameworks continue to evolve, stakeholders should monitor how similar cases are adjudicated in other regions and advocate for clear property rights protections.
Looking ahead, the intersection of crypto property rights and cross-border insolvency will remain a critical area of legal development. The Madras ruling not only safeguards individual users but also contributes to the maturation of digital asset markets by aligning judicial approaches across key jurisdictions. As courts worldwide continue to refine their stance on crypto property, this decision marks a significant step toward harmonized and equitable governance for the global cryptocurrency ecosystem.