Crypto Chaos in India: Courts Say Crypto is Property (And It’s Causing a Stir!)

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Key Highlights

  • Yes, India officially recognizes cryptocurrencies as “property” – it’s not just some internet fad anymore!
  • IBC sections 17 & 18 put resolution professionals in charge of crypto assets during insolvency. Someone’s got to wrangle the virtual gold!
  • But hey, managing crypto assets isn’t a walk in the park – private keys, cross-border chaos, and exchange rules are still messing things up.

Cryptocurrency in India is quickly turning from a risky “let’s throw some money into the digital ether” to a serious business asset. Some companies are using it like cash, others are treating it as collateral. Whatever the case, one thing’s for sure – insolvency experts are scratching their heads over how to handle this digital goldmine when companies hit rock bottom.

The real question now isn’t “Does crypto matter?” – because, surprise, surprise, it does. The pressing issue is how the heck you deal with it when a company goes belly up and gets tangled in the Corporate Insolvency Resolution Process (CIRP). Buckle up, it’s about to get technical!

Recognizing Cryptocurrency for What It Is – Property!

Indian law has always been a bit shy when it comes to cryptocurrency. The word “property” gets thrown around, but in legal circles, it’s as ambiguous as a foggy morning. Is it talking about stuff like land, or is it just saying, “Hey, whatever you can’t touch but can trade is property”? No one’s really sure.

That was until a few years ago when the Supreme Court decided to give crypto a seat at the grown-up table. In the epic showdown of Internet and Mobile Association of India v Reserve Bank of India (RBI), the court went full “you can’t ignore this” and struck down the RBI’s ban on banks dealing with crypto. The logic? Even if crypto doesn’t fit neatly into old-school definitions, it’s real and doing real-world damage… er, good!

Fast forward to 2025, and the Madras High Court made an even bolder move. In Rhutikumari v Zanmai Labs Pvt Ltd, they officially declared cryptocurrency as property. Yes, you read that right – property. And to seal the deal, they took a good look at global laws and even nodded at the Income Tax Act, which also called crypto a “virtual digital asset (VDA)” – like that was going to help everyone get the point!

Cryptocurrency Under the IBC: You Get Property, You Get Property, Everybody Gets Property!

The IBC, with its oh-so-predictable broad view of “property,” is now adding crypto to its list of assets. Money, goods, actionable claims, land – and now, digital assets are getting their own fancy label under section 3(27). So when a company goes bankrupt, crypto is just another item on the asset list. No special treatment. Well, except for the fact it’s practically invisible unless you’ve got the right keys.

Once the CIRP kicks off, sections 17 and 18 hand over the reins to the resolution professional (RP). And guess what? They’re now in charge of EVERYTHING. Crypto wallets, exchange accounts, private keys – it’s all part of the liquidation process. Welcome to the future, folks, where cryptocurrencies are treated just like regular assets during insolvency proceedings.

Practical Problems and Cross-Border Woes

So, crypto is now “property,” right? But managing it in real life is more like a techie’s nightmare. Cryptos are stored in digital wallets, and unless someone hands over the private keys, good luck accessing those assets! It’s like having a treasure chest with no map, no key, and no clue.

But wait – it gets juicier. There’s a little thing called cross-border issues. While section 3(27) claims that property from outside India counts, crypto on foreign exchanges is still governed by the laws of that country. India hasn’t exactly signed up for international frameworks like the UNCITRAL Model Law on Cross-Border Insolvency. So, if you’ve got crypto on a foreign exchange, it’s a bit like sending your money on a vacation with no return ticket.

And, of course, we can’t forget about anonymity. Some cryptocurrencies are all about keeping their users hidden, and many exchanges operate in what can only be described as a legal fog. Tracking and securing these assets is like trying to catch a greased pig – it’s just not happening easily.

What’s Next for Crypto and Insolvency in India?

India’s made some big strides in pulling crypto into the legal and insolvency fold. Courts have decided that crypto is property, tax laws are on board, and the IBC has room for it in its grand design. But, of course, the fun doesn’t stop there. Practical problems still lurk, and regulatory gaps are lurking like an unpaid credit card bill.

As more companies start filling their coffers with digital assets, insolvency experts are going to have to step up their game. Managing crypto properly, while ensuring creditor rights stay protected, is going to be a tricky balancing act – but hey, it’s 2026, and who needs a boring job when you can wrestle with virtual currency, right?

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2026-03-03 13:24