The proliferation of cryptocurrency holdings on corporate balance sheets has introduced a novel dimension to insolvency practice in India. Once purely speculative, cryptocurrency is now also held as treasury reserves, trading inventory and collateral. Within the Indian insolvency framework, the central question is no longer whether cryptocurrency is relevant to insolvency proceedings, but how it should be characterised, controlled and dealt with once a corporate insolvency resolution process (CIRP) is triggered.
“Property” is not specifically defined in a manner that conclusively addresses all types and forms of assets. Rather, it is understood contextually depending on the law under which it is examined – whether constitutional provisions under article 300-A, fiscal legislation such as the Income Tax Act, 1961, or the Insolvency and Bankruptcy Code (IBC). Therefore, cryptocurrency’s status for this article must be analysed within the IBC-specific statutory context.
Cryptocurrency as property under Indian law
Vaijayant Paliwal
Partner
Shardul Amarchand Mangaldas & Co
For years, Indian law treated cryptocurrency ambiguously. The turning point arrived when the Supreme Court, in Internet and Mobile Association of India v Reserve Bank of India (2020), struck down the RBI’s circular prohibiting regulated entities from dealing with virtual currencies. The court acknowledged that while virtual currencies defy conventional legal definitions, they possess real existence and effect.
More direct recognition of cryptocurrency’s proprietary character emerged from the Madras High Court, in Rhutikumari v Zanmai Labs Pvt Ltd (2025). Drawing upon Indian precedents that “property” signifies every possible interest a person can hold, and the New Zealand High Court’s finding, in Ruscoe v Cryptopia Ltd (2020), that cryptocurrencies constitute intangible property capable of being held in trust, the court concluded that cryptocurrency qualifies as property under Indian law. The court further noted that cryptocurrency is already recognised as a “virtual digital asset” under section 2(47A) of the Income Tax Act, 1961, reinforcing its proprietary status within India’s statutory framework.
IBC Framework brings cryptocurrency within the insolvency estate
The IBC adopts a deliberately expansive definition of “property” under section 3(27), encompassing “money, goods, actionable claims, land and every description of property situated in India or outside India”. This breadth reflects legislative foresight, ensuring that technological innovation does not create asset classes falling outside insolvency jurisdiction.
Once classified as property, cryptocurrency held by a corporate debtor forms part of the insolvency estate. Upon commencement of the CIRP, section 17 vests management in the resolution professional (RP), while section 18 obligates the RP to take control of all assets. Cryptocurrency wallets, exchange accounts and private keys therefore fall within the RP’s mandate to identify and preserve such assets.
Control challenges, cross-border insolvency issues in cryptocurrency cases
Recognising cryptocurrency as property does not eliminate practical difficulties. Cryptocurrency is stored in digital wallets accessed by private keys, with ownership verified by network participants maintaining a distributed ledger. If the corporate debtor’s management fails to disclose private keys, the resolution professional may face significant difficulties in accessing these assets.
Jurisdictional questions also arise because blockchain assets are inherently borderless. Although section 3(27) extends to property situated outside India, the treatment of such assets may differ depending on the jurisdiction in which they are held. Cryptocurrency on a foreign exchange remains subject to that jurisdiction’s regulatory framework. India has not adopted the UN Commission on International Trade Law’s Model Law on Cross-Border Insolvency, and has instead created enabling provisions for bilateral treaties under the IBC. However, such treaties with specific countries are yet to be concluded.
The absence of a comprehensive legal framework in India means that exchanges and custodians often operate in a legal grey zone, while the anonymity features inherent in certain cryptocurrencies present obstacles to asset tracing.
Conclusion
Indian law demonstrates progressive accommodation of cryptocurrency within established legal principles. The judicial recognition of virtual digital assets as property, statutory acknowledgement under taxation law, and the deliberately expansive IBC framework collectively provide a coherent basis for treating cryptocurrency as part of the insolvency estate.
While technological control, regulatory uncertainty and cross-border enforcement pose real challenges, these are operational complexities rather than doctrinal barriers. The code’s architecture is sufficiently flexible to absorb digital assets within its remedial scheme. As cryptocurrency adoption deepens across Indian corporates, insolvency practice will continue to adapt, ensuring that the intangibility of digital assets does not undermine creditor rights or equitable distribution.
Vaijayant Paliwal is a partner and Shruti Poddar is an associate at Shardul Amarchand Mangaldas & Co
Shardul Amarchand Mangaldas & Co
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