Key Highlights
- Courts and tax law in India officially recognize cryptocurrencies as property.
- IBC sections 17 & 18 give resolution professionals control over crypto assets during insolvency.
- Operational challenges remain, including private keys, cross-border issues, and exchange regulations.
Cryptocurrency is fast becoming a lot more than just a wild guess in India. Numerous companies now hold it on their balance sheets: some of it is being treated as cash reserves or trading stock, while other times it’s used as a collateral. This growing presence has brought new challenges for insolvency experts.
The main thing insolvency practitioners need to be thinking about these days isn’t so much whether crypto assets matter, but rather how to deal with them when a company goes belly up and gets dragged into the Corporate Insolvency Resolution Process (CIRP).
Recognising cryptocurrency for what it is: Property
Indian law has a long history of being pretty cautious about cryptocurrency. The term “property” is one of those words that’s used but doesn’t really have a crystal clear definition – it depends on the context – whether it is talking about something in the constitution, tax law, or the Insolvency and Bankruptcy Code (IBC).
A couple of years back, the Supreme Court made a big decision in the case of the Internet and Mobile Association of India v Reserve Bank of India (RBI).
The court struck down the RBI’s circular, which banned banks and other financial institutions from dealing with crypto, and the reason they did that was that the court recognised that even though crypto doesn’t fit neatly into traditional legal definitions, at the end of the day, it’s still real and has real-world effects.
Then, in 2025, another court in the south of India, the Madras High Court, made an even bigger decision. In the case of Rhutikumari v Zanmai Labs Pvt Ltd, they said that cryptocurrency is definitely property, and to back that up, they looked at all the other Indian law and also at what had been decided by courts overseas.
They also pointed out that it’s already been officially recognised as a “virtual digital asset (VDA)” by the Income Tax Act, which sort of seals the deal when it comes to how crypto should be viewed in law.
Cryptocurrency under the IBC
The IBC takes a broad view of what counts as “property” under section 3(27). It includes money, goods, actionable claims, land, and basically any type of property, whether it is located in India or abroad.
Once cryptocurrencies are considered property, they become part of the company’s assets in insolvency.
When a CIRP begins, sections 17 and 18 give the resolution professional (RP) the authority to manage all of the company’s assets, as per the Law Asia report. This means the resolution professional (RP) has the responsibility to take charge of everything—from crypto wallets and exchange accounts to private keys. In other words, cryptocurrencies are treated much like any other asset during insolvency proceedings.
Practical and cross-border issues
Even though cryptocurrencies are legally recognized as property, managing them in practice can be tricky. Cryptocurrencies are kept in digital wallets that need private keys to access. If the company’s management does not provide these keys, the RP may have trouble getting to the assets.
Cross-border issues make it more complicated. Even though section 3(27) covers property outside India, crypto on foreign exchanges is still governed by the laws of that country. India has not adopted international frameworks like the UNCITRAL Model Law on Cross-Border Insolvency, and bilateral treaties under the IBC are still few.
On top of that, some cryptocurrencies offer anonymity features, and exchanges often operate in a regulatory gray area, making it harder to track and secure assets.
What comes next
India has made important progress in bringing cryptocurrencies into its insolvency system. Courts have confirmed that digital assets are property, tax laws recognize them, and the IBC provides a flexible structure to manage them.
Practical issues and regulatory gaps still exist, but these are operational challenges rather than legal obstacles. As more companies in India hold cryptocurrencies, insolvency professionals will have to adapt, ensuring that digital assets are properly managed and that creditor rights are protected.
Also Read: India’s CBI Targets ₹1.86 Cr ‘Digital Arrest’ & ₹350 Cr Crypto Ponzi Schemes
