On October 25, the Madras High Court (Justice N. Anand Venkatesh) held in Rhutikumari v. Zanmai Labs Pvt Ltd that cryptocurrency qualifies as property under Indian law and can be “held in trust.” The order granted interim protection to an investor whose 3,532.30 XRP holdings on the WazirX platform were frozen after the July 2024 hack. Beyond the immediate relief for the petitioner, the judgment is a practical legal pivot: it gives holders a clear, enforceable route to seek injunctions, trusteeship duties and other civil remedies, an important complement to RBI’s evolving CBDC, UPI and tokenisation workstreams.
What the court actually decided
Justice Venkatesh’s reasoning is concise and doctrinally anchored:
- Property status: Cryptocurrencies are intangible but exhibit the key attributes of property definability, identifiability, transferability and permanence on blockchain ledgers and therefore can be treated as property capable of beneficial ownership.
- Held in trust: The court confirmed that crypto-assets can be held in trust, which implies custodial responsibilities for platforms that control or custody user assets.
- Jurisdiction & interim relief: Although Zanmai (WazirX’s Indian operating arm) argued that the arbitration seat and Singapore restructuring barred domestic relief, the court found a sufficient Indian nexus transfer from a Chennai bank and access from within India and granted an interim injunction preventing Zanmai and its directors from reallocating the petitioner’s XRP pending arbitration.
You can read the court’s published order on the Madras High Court site. (mhc.tn.gov.in)
Why this judgment matters practically
- Stronger investor remedies. Recognising crypto as property converts previously fuzzy contractual claims into concrete property claims. That means holders can pursue injunctions, tracing and trust-based remedies more effectively, a critical tool where exchanges freeze or reallocate assets.
- Custodian accountability. If exchanges act as custodians/trustees, they face fiduciary-style duties. That raises the bar for segregation of client funds, independent audits and governance, which in turn helps align exchange behaviour with RBI / FIU compliance expectations.
- Bankruptcy & succession clarity. Property status makes it clearer how VDAs should be handled in insolvency, estate, and succession matters, reducing legal limbo that has complicated recoveries in high-profile incidents.
- Domestic courts remain relevant. The ruling signals that even where arbitration seats sit abroad, Indian courts can and will grant interim protection over assets connected to domestic parties and transfers a meaningful jurisdictional precedent.
How this fits into India’s broader policy architecture — UPI, CBDC sandboxes and tokenisation
This judgment is not an isolated judicial flourish. It dovetails with a much larger, deliberate architecture that the Indian state has been building:
- UPI and DPI as the starting rails: India’s UPI created mass digital payment reliability and trust, a public-rail model that private firms operate on. That infrastructure reduces the “onboarding” risk for digital assets and gives policymakers confidence to experiment with programmable money. (We’ve previously argued UPI is the foundational public good enabling tokenised services.)
- RBI’s CBDC sandboxes & UMI tokenisation pilots: The RBI’s retail CBDC sandbox and the Unified Markets Interface (UMI) pilot for tokenising instruments (e.g., CDs) show that India is building regulated rails for programmable settlement and tokenised ownership, the very technical guarantees courts look for when treating something as property. Crypto’s property status and CBDC/tokenisation pilots are complementary: one provides legal character, the other provides regulated settlement rails.
- Regulatory enforcement (FIU-IND) and taxes: With FIU registration requirements and taxation of virtual digital assets already in place, the Madras ruling adds judicial clarity on rights while administrative regimes provide compliance guardrails. Together, they reduce regulatory ambiguity, a key factor global investors cite when deciding to deploy capital in India.
In short, the court’s property recognition plugs a legal hole while RBI and other bodies are building the technical and supervisory infrastructure that makes tokenised finance credible.
Practical implications for exchanges, users and regulators
- Exchanges must sharpen custody controls. Expect tighter demands for segregation, audits and trustee-like governance from litigants and possibly from regulators seeking to reduce litigation risk.
- Investors gain a stronger remedy toolkit. Interim injunctions, tracing orders and trust claims become more straightforward and helpful where cross-border restructurings or offshore schemes attempt to dilute domestic claims.
- Policymakers get breathing room. The judgment supports India’s measured approach: allow pilots (CBDC, tokenisation) and build legal clarity around ownership rather than imposing blunt prohibitions that push activity underground.
Limits and unanswered questions
This ruling is important but not a full-code solution. It is an interim, case-driven recognition; legislatures and regulators still need to clarify points such as custodial licensing standards, priority rules in insolvency, and cross-border enforcement of property rights over tokens. The pending COINS Act and future FIU rulemaking will be decisive for long-term clarity.
Author’s thoughts
The Madras High Court’s finding that cryptocurrency is property is a legal hinge: it converts abstract policy experiments and administrative rules into enforceable private rights. That matters because India’s digital-finance strategy, UPI’s rails, CBDC sandboxes, and UMI tokenisation pilots work only when private rights are predictable. Courts clarifying property status reduce uncertainty for investors and innovators alike, and make it easier for public policy (sandboxing, tokenised settlement) to bear practical fruit. This is precisely the steady, architecture-first pivot India needs.
The Rhutikumari judgment marks a practical advance in India’s crypto landscape: it provides owners with property rights, pressurises custodial platforms to meet trust-like standards, and aligns judicial clarity with the RBI’s technical experiments on CBDC and tokenisation. For India’s 20–25 million crypto users and the fintech builders on top of UPI and DEPA, that combination of regulatory supervision, technical rails, and judicial protections is what turns speculative novelty into a workable part of the financial system.
