Author: Ashwina Verma, Banasthali Vidyapeeth
Abstract
Cryptocurrencies have emerged as significant digital assets, challenging traditional legal frameworks. A core legal issue is whether cryptocurrencies can be legally classified as “property” and what rights and protections are conferred upon their holders. This article analyses the evolving global and Indian legal perspectives on cryptocurrency as property, explores implications for taxation, inheritance, and civil remedies, and highlights key judicial and legislative developments. The piece proposes a harmonized legal approach for India, drawing from comparative jurisdictions.
To the Point
The question of whether cryptocurrencies constitute “property” is crucial for legal recognition, transferability, enforceability, and taxation. Traditional legal doctrines, rooted in tangible or fiat forms of ownership, often fall short in addressing digital assets. The article reviews legal interpretations across jurisdictions, including India, the UK, and the US, and outlines practical consequences of recognising cryptocurrency as a property class.
Use of Legal Jargon
– Res (Latin: the subject matter of ownership)
– Lex situs (law of the place where the property is situated)
– Corpus and animus (elements of possession)
– Constructive trust
– Chose in action (a property right enforceable through legal action)
– Digital assets, intangible property, fiduciary duty, title, beneficial interest, volenti non fit injuria
The Proof
1. Legal Frameworks and Recognition
In India, the law does not explicitly define cryptocurrency as property under any statute. However, under Section 14 of the Transfer of Property Act, 1882 and the general principles of the Indian Contract Act, 1872, the term “property” is broad enough to include intangible assets.
The Income Tax Act, post the 2022 Finance Act amendments, treats cryptocurrencies as “virtual digital assets” and taxes them under capital gains, implicitly acknowledging them as assets.
The UK Jurisdiction Taskforce (UKJT) in 2019 issued a Legal Statement on Cryptoassets and Smart Contracts declaring that cryptoassets can be considered property under English law. The reasoning was grounded in the fact that cryptoassets fulfill the four characteristics of property:
1. Identifiability
2. Assignability
3. Capacity to be held on trust
4. Permanence
In the US, the IRS classifies cryptocurrencies as property for tax purposes. Ownership is protected under common law principles of property rights, and cryptocurrencies can form part of a bankruptcy estate.
Case Laws
1. AA v. Persons Unknown [2019] EWHC 3556 (Comm) – UK High Court recognized Bitcoin as property capable of being the subject of an injunction.
2. Ruscoe v. Cryptopia Ltd (in liquidation) [2020] NZHC 728 – New Zealand High Court held cryptocurrencies as a species of intangible personal property.
3. Vorotyntseva v. Money-4 Ltd [2018] EWHC 2596 – Reaffirmed that cryptoassets can be subject to freezing orders, reinforcing their status as property.
4. In re Hashfast Technologies LLC (2016) – US Bankruptcy Court included Bitcoin in the debtor’s estate, treating it as property.
5. Internet and Mobile Association of India v. RBI (2020) 10 SCC 274 – While not directly addressing property status, this case opened avenues for crypto legitimacy by lifting banking restrictions.
Conclusion
Cryptocurrency’s legal treatment as property is essential for coherent regulation, investor protection, and dispute resolution. The evolving jurisprudence globally suggests a trend towards recognition of cryptocurrencies as intangible property. In India, while formal legislation is awaited, judicial and administrative treatment is moving in this direction. A clear statutory recognition—perhaps through a Digital Assets Act—could settle ambiguity and align India with global legal standards.
Suggestions
– Enact a comprehensive legal framework classifying cryptocurrencies as a new property class.
– Enable legal mechanisms for inheritance, trust formation, and secured transactions involving digital assets.
– Introduce dispute resolution protocols specific to blockchain-based assets.
FAQS
Q1. Can I claim ownership of cryptocurrency in India under current laws?
Yes, while there’s no specific legislation, general property and contract laws apply. Income Tax laws treat crypto as assets.
Q2. Are cryptocurrencies protected during bankruptcy or death?
In jurisdictions like the US and New Zealand, they are part of the estate. In India, legal recognition is evolving but not yet explicit.
Q3. Can I file a theft or fraud case if my cryptocurrency is stolen?
Yes, under cyber and property-related provisions. Courts have granted injunctions and freezing orders based on ownership.
Q4. What kind of property is cryptocurrency legally considered?
Mostly considered intangible movable property or chose in action in legal jurisdictions.
Q5. Does India have any law explicitly defining crypto as property?
No, but the Finance Act, 2022 introduced taxation for crypto assets, indicating implicit recognition.
References
– Transfer of Property Act, 1882
– Indian Contract Act, 1872
– Finance Act, 2022
– Income Tax Act, 1961
– AA v. Persons Unknown [2019] EWHC 3556 (Comm)
– Ruscoe v. Cryptopia Ltd [2020] NZHC 728
– Legal Statement on Cryptoassets and Smart Contracts, UKJT (2019)
– Internal Revenue Service (IRS) Notice 2014-21 (US)
– Internet and Mobile Association of India v. RBI (2020)
