Crypto Rights in India: Court Protects XRP Custody

The Ruling That Redefined Crypto Property

Wait, did you know your crypto could be treated as property in court, not just numbers on a screen? A Madras High Court ruling says yes — for 3,532 XRP tokens held by a user, they’re protected as client property held in trust.

Look, this isn’t about a single hack. It’s about who really owns your digital assets when they sit inside an exchange. The court, led by Justice N. Anand Venkatesh, blocked WazirX’s plan to socialize losses after a $234 million hack, insisting that unaffected holdings could not be redistributed to cover others’ gaps.

So the judges dismissed the idea as a flawed “group insurance of a self-help group” and said there wasn’t a contractual basis to do it. That left the user’s XRP exactly where it should be — as property the exchange holds on trust for the owner, not as a communal pool to be dipped into at will.

Here’s the thing: this is a foundational moment. It signals that custody arrangements can be treated as a trust relationship, giving individual traders a clearer line of protection in Indian courts.

Custody Is Property: A New Benchmark

This ruling pushes the needle on how India views crypto custody. When an exchange keeps assets for you, the court said those assets are not mere entries in an account ledger — they are property held in trust for the client. That’s a big shift. It means, in practical terms, your holdings aren’t automatically fungible with the exchange’s risk management schemes or contingency plans.

This creates a vulnerability for platforms that tried to treat customer coins as mutual losses to be shared. If your assets are in custody, you gain a stronger legal claim to recover or segregate them in disputes. It also nudges regulators toward clearer, codified rules about custody, fiduciary duties, and how exchanges handle client property in distress.

But the system isn’t fully lined up yet. India’s regulatory landscape for crypto remains underdeveloped, and there’s a tension between court-led clarity and policy that moves slowly. The case shows courts stepping into a central role in defining rights and responsibilities—while the law tries to catch up with fast-moving tech.