In Rhutikumari v. Zanmai Labs Pvt. Ltd, the Court granted protection to an investor whose digital assets were frozen on a crypto exchange after a massive cyberattack.
- In 2020, New Zealand High Court too held crypto currencies, as digital assets and a form of property capable of being held on trust.
Key Highlights of the Ruling
What is Cryptocurrency?
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- Nature of Cryptocurrency: The court held that it is not a tangible property nor is it a currency. Rather, it is a property, which is capable of being enjoyed, possessed and being held in trust.
- The Court reaffirmed previous SC rulings on the principles of property and held them to apply equally to cryptocurrencies.
- Legal Clarification: The court held that under Indian law, cryptocurrency is classified as a Virtual Digital Asset (VDA) and it is not treated as a speculative transaction under Income Tax Act, 1961.
- Clarification on the RBI Ban (2018): The Court held that RBI had not banned virtual currencies as such; it had only prohibited banks from facilitating their trade.
Significance of the Ruling
- Addresses the Regulatory Grey Zone: The ruling marks a landmark judicial acknowledgment of digital assets as legally ownable property.
- Protects Investors: It could allow investors to seek traditional property remedies like bank guarantees rather than relying on exchange-driven loss-sharing schemes.
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