Why NCDRC called the current crypto regime ‘nebulous’, dismissed WazirX case

The case before the NCDRC

On July 18, 2024, over $233 million, or about 45% of the value of WazirX’s digital asset holdings​, were withdrawn from one of its ‘multisig wallets’. A multisig or multisignature wallet requires a user to provide two or more private keys for authentication before a transaction can be processed and confirmed.

The company immediately halted withdrawals on the platform, even as users incurred massive losses. In September, a Singapore court granted a four-month moratorium on any proceedings against it, further halting withdrawals. WazirX has since claimed that the North Korea-based Lazarus Group was responsible for the attack.

In January 2025, Indian users approached the NCDRC, claiming a deficiency in the services provided by WazirX. They also alleged that the platform was indulging in unfair trade practices by halting withdrawals.

The NCDRC considered two questions in the case. First, whether cryptocurrency could be considered a ‘good’ under the Consumer Protection Act, 2019 (CPA). Second, whether it could hear the case at all.

1. 01

   CRYPTO AS A ‘GOOD’

   Under Section 2(21) of the CPA, the term ‘goods’ means “every kind of movable property”. The NCDRC acknowledged that cryptocurrencies, officially dubbed “virtual digital assets” (VDA), are included in the definition of property under the Income Tax Act (and taxed at a rate of 30% since April 2022). However, the NCDRC repeatedly flags the lack of clarity in this field, noting that:

   • The connection between VDAs and consumer services is “still in a nebulous state”;

   • The Reserve Bank of India “has not yet taken any responsibility” by regulating platforms like WazirX, “even though concerns have been raised about financial crisis occurring in the offing”.

   Ultimately, the NCDRC did not clarify crypto’s status as a good, stating, “on the one hand they can be treated to be digital products as they are digital goods, but they are still not recognised as currencies or securities”.

2. 02

   NCDRC JURISDICTION

   The NCDRC said there are no laws to “regulate or even provide legal measures for tackling such claims”. It also noted that there are several different aspects to consider in a case like this, including the criminal aspects of the complaint against WazirX, as it paints a picture of fraud committed against the users. Depending on the nature of the deception alleged, the NCDRC also said the Prevention of Money Laundering Act could also apply.

   It thus ruled that “the consumer forum (NCDRC) may not be that well equipped…to carry out investigations into the alleged breach”. The NCDRC indicated that either the legislature or a “judicial platform” like the SC or a High Court would have to declare that such cases could be heard in the consumer court before it takes any action.

Cryptocurrency regulation in India

While possessing and making transactions with cryptocurrency has not been outlawed, the Reserve Bank of India has not recognised it as legal tender and has attempted to impose significant restrictions on it in the past. Noting the various risks associated with virtual currencies (VCs), the RBI in 2018 issued a notification stating that “entities regulated by RBI shall not deal with or provide services to any individual or business entities dealing with or settling VCs.” Importantly, the RBI did not impose an outright ban on crypto trading but instead focused on entities such as banks and financial institutions to prevent them from facilitating such activities.

However, the Supreme Court struck down this particular notification in 2020, while holding that the RBI could, in fact, regulate VCs. It ruled that the notification disproportionately impacted the rights of those running VC exchanges under Article 19(1)(g) of the Constitution, which gives all citizens the right “to practise any profession, or to carry out any occupation, trade or business”. According to the SC, the RBI failed to prove that VC exchanges have damaged the functioning of financial institutions.

So far, Parliament has not passed any laws specifically governing VCs and related transactions, despite attempts for the same. In 2021, the Centre floated ‘The Cryptocurrency and Regulation of Official Digital Currency Bill’, which would ban ‘private’ cryptocurrencies and instead establish a Central Bank Digital Currency and a board to oversee crypto-related regulations. However, the bill was never discussed in Parliament, and there has been no movement since.