Adverse possession traditionally concerns immovable property. Could long-term control of cryptocurrency, NFTs or tokenised assets ever create legally recognised ownership?
Introduction
Property law has traditionally been concerned with land and other forms of property over which legal rights can be identified and enforced. One important doctrine in this area is adverse possession, under which possession of another person’s property, when it is open, continuous, hostile and maintained for the prescribed statutory period, may ultimately affect the rights of the true owner.
The doctrine becomes more difficult to apply when the subject matter is digital. Cryptocurrency, Non-Fungible Tokens (NFTs), digital collectibles and other blockchain-based assets can have substantial economic value without being physically possessed in the conventional sense. Control may instead depend upon a private key, wallet or blockchain credentials.
This raises a novel legal question: Can the doctrine of adverse possession, traditionally associated with possession of immovable property, extend to digital assets where control is exercised through technological means rather than physical occupation?
The question requires an important distinction between technical control and legal ownership. A blockchain may show that a particular wallet controls a token, but that record does not necessarily answer whether the person controlling the wallet has a legally enforceable right to the asset.
Indian law does not presently provide a specific statutory framework establishing adverse possession of cryptocurrencies or NFTs. Therefore, the question cannot be answered merely by applying the idea that “long possession creates ownership.” It requires examination of the statutory framework governing adverse possession and whether that framework can logically and legally operate in the context of digital assets.
What Is Adverse Possession Under Indian Law?
Adverse possession is not simply long possession. It is a doctrine under which possession that is hostile to the true owner’s title, and which satisfies the requirements developed by Indian courts, can ultimately result in the loss of the owner’s right after the applicable limitation period.
The principal statutory framework is found in the Limitation Act, 1963. Section 27 is particularly important because it provides for the extinguishment of the owner’s right to property when the prescribed period for instituting a suit for possession has expired.
Article 65 of the Schedule to the Limitation Act specifically provides a period of twelve years for a suit for possession of immovable property or any interest therein based on title. The period begins when the possession of the defendant becomes adverse to the plaintiff.
Thus, Section 27 and Article 65 must be read together. Article 65 provides the relevant limitation period for the specified claim concerning immovable property, while Section 27 deals with the consequence of expiry of the limitation period.
This is important because adverse possession is not a general rule that applies automatically to every form of property merely because someone has controlled it for a long time.
What Are the Traditional Requirements of Adverse Possession?
Indian courts have repeatedly held that long possession by itself is insufficient.
In Karnataka Board of Wakf v. Government of India, (2004) 10 SCC 779, the Supreme Court explained that adverse possession must be nec vi, nec clam, nec precario—peaceful, open and continuous—and must be adequate in continuity, publicity and extent. The possession must also be actual, visible, exclusive, hostile and continued for the statutory period.
The claimant must therefore establish matters such as:
- Actual possession – there must be possession of the property rather than a merely abstract assertion of ownership.
- Continuity – possession must continue for the legally prescribed period.
- Open and notorious possession – the possession must be sufficiently apparent to the true owner.
- Exclusivity – the claimant must possess the property in a manner inconsistent with the true owner’s possession.
- Hostility to the true owner’s title – possession must be adverse rather than permissive.
- Animus possidendi – there must be an intention to possess in a manner hostile to the true owner’s rights.
In P.T. Munichikkanna Reddy v. Revamma, (2007) 6 SCC 59, the Supreme Court emphasised that mere long possession is not enough. The claimant must establish the character and starting point of the adverse possession, including the intention to dispossess and the circumstances in which the possession became adverse.
The Supreme Court again summarised these principles in Government of Kerala v. Joseph, 2023 INSC 693, stressing that possession must be open, clear, continuous and hostile, supported by clear and cogent evidence. It also reaffirmed that mere possession for a long period does not automatically establish adverse possession.
Therefore, the legal test is substantially more demanding than simply asking how long a person has controlled property.
Section 27 and Article 65: Why the Distinction Matters
The statutory framework creates an important difficulty for digital assets.
Section 27 uses the expression “any property” and provides that, when the period prescribed for instituting a possession suit expires, the owner’s right to the property is extinguished. In Ravinder Kaur Grewal v. Manjit Kaur, (2019) 8 SCC 729, the Supreme Court observed that the expression “any property” in Section 27 can include corporeal as well as incorporeal property. At the same time, the Court specifically recognised that Article 65 deals with immovable property.
This creates an important distinction.
Section 27 by itself does not establish a twelve-year adverse-possession period for every kind of property. The applicable limitation period must come from the relevant statutory provision governing the particular claim.
Article 65 expressly concerns possession of immovable property or an interest therein based on title. Therefore, it cannot simply be assumed that its twelve-year period applies to cryptocurrency, NFTs or other digital assets.
This is one of the strongest reasons why the traditional doctrine cannot presently be transplanted directly into the digital-asset context.
What Counts as a Digital Asset?
“Digital property” is not a single legal category. Different digital assets can involve different rights and legal relationships.
Cryptocurrency
Cryptocurrencies such as Bitcoin operate through blockchain-based systems. Control is generally exercised through cryptographic credentials rather than physical possession.
The person controlling the private key may be able to transfer the asset, but technical ability to transfer it does not necessarily answer the separate legal question of entitlement.
NFTs
An NFT is a unique blockchain token. However, ownership of an NFT should not automatically be equated with ownership of the underlying artwork or intellectual-property rights.
For example, a person may purchase an NFT associated with a digital artwork without necessarily acquiring the copyright in that artwork. Copyright is a separate legal interest governed by the Copyright Act, 1957.
Tokenisation creates an additional layer of complexity.
A digital token may be designed to represent an interest connected with a physical asset, such as land or another real-world asset. But the legal effect of the token must be distinguished from the legal title to the underlying asset.
For example, Indian law imposes specific requirements on transfers of immovable property. Section 54 of the Transfer of Property Act, 1882 provides the statutory framework for sale of immovable property, while the Registration Act, 1908 contains compulsory-registration requirements for specified instruments affecting rights in immovable property.
Therefore, a token representing real estate cannot automatically be treated as equivalent to legal title in the underlying land.
Technical Control Is Not the Same as Legal Ownership
This distinction lies at the heart of the digital-adverse-possession debate.
Consider a hypothetical example.
A lawfully owns an NFT. Due to a security breach, the NFT is transferred to B’s wallet without A’s authorisation. B now controls the private key and can technically transfer the NFT.
The blockchain records B’s control.
But several legal questions remain:
- Was the transfer authorised?
- Was there consent?
- Was there fraud or unauthorised access?
- Was there a valid contractual basis for the transfer?
- Does B have any legally recognised right to the NFT?
- What remedies are available to A?
The blockchain can provide evidence of the transaction history, but the technological record does not necessarily resolve every question of legal entitlement.
Accordingly, technical control cannot automatically be treated as legal ownership.
Current Indian Law on Digital Assets
Indian law has recognised digital assets for certain regulatory and taxation purposes, but this does not amount to a comprehensive property-law regime.
The Income-tax Act, 2025, which is operative from 1 April 2026, defines “virtual digital asset” in Section 2(111). The definition covers specified cryptographically generated digital representations of value, NFTs and certain other crypto-assets. The Act also contains Section 194 dealing with taxation of income from transfer of virtual digital assets.
However, tax recognition should not be confused with a declaration of general civil-law ownership.
The fact that legislation identifies an asset for taxation does not by itself establish that every traditional doctrine of property law—including adverse possession—automatically applies to that asset.
As of the present legal position, there is no specific Indian statutory provision expressly providing that cryptocurrency, NFTs or comparable digital assets can be acquired through adverse possession.
Can Digital Assets Satisfy the Requirements of Adverse Possession?
The central question can now be tested against the traditional requirements.
1. Possession
Traditional adverse possession is strongly associated with actual possession of property, particularly land.
Digital assets are instead controlled through wallets, private keys and cryptographic systems.
A court would therefore first have to determine whether such technical control constitutes the legally relevant form of possession for the particular asset and cause of action.
2. Openness and Publicity
This requirement creates another difficulty.
Adverse possession traditionally requires possession sufficiently open and notorious to bring the hostile claim to the knowledge of the true owner.
Blockchain transactions may be publicly visible, but blockchain addresses are frequently pseudonymous. A transaction being publicly recorded does not necessarily mean that the identity of the person controlling the wallet or the hostile nature of their claim was known to the true owner.
Therefore, blockchain transparency and legal publicity are not necessarily the same thing.
3. Hostility and Animus Possidendi
The claimant must possess the property in denial of the true owner’s rights.
This becomes particularly difficult where control arose from hacking, theft, fraud or a mistaken transfer.
A person should not be able to argue simply:
“I obtained control unlawfully and retained it for twelve years, therefore I became the owner.”
The traditional doctrine requires more than duration. It requires legally recognisable adverse possession satisfying the applicable statutory framework.
4. Continuous Possession
Digital assets can be transferred almost instantaneously between wallets. They may also move across exchanges and jurisdictions.
This raises questions about whether continuity can be established when the asset itself changes wallets repeatedly or when different persons successively exercise control.
Traditional doctrines concerning continuity and tacking would therefore require careful adaptation rather than automatic application.
5. Applicable Limitation Period
This may be the most fundamental obstacle.
Article 65 expressly prescribes twelve years for possession of immovable property or an interest therein based on title. The Limitation Act also contains separate provisions concerning specific movable property, including Articles 68 and 69, generally providing three-year periods for specified claims involving movable property.
But none of these provisions expressly establishes a twelve-year adverse-possession regime for cryptocurrency or NFTs.
Therefore, before asking whether long-term digital control can become adverse possession, a court would first have to identify the legal nature of the asset, the nature of the claimant’s right, the cause of action and the applicable limitation provision.
What Does Indian Case Law Suggest?
The existing Supreme Court jurisprudence provides the principles, but not a direct answer for cryptocurrency or NFTs.
Karnataka Board of Wakf v. Government of India establishes the traditional requirements of open, continuous, hostile and exclusive possession and the importance of animus possidendi.
P.T. Munichikkanna Reddy v. Revamma explains that adverse possession involves more than the passage of time and requires proof concerning the nature and commencement of hostile possession.
Ravinder Kaur Grewal v. Manjit Kaur is particularly significant because the Supreme Court recognised that adverse possession can result in a perfected right and that a person who has acquired title by adverse possession can rely upon it as a claim as well as a defence. The judgment also noted that Section 27 refers to “any property”, including corporeal and incorporeal property, while recognising that Article 65 specifically concerns immovable property.
Finally, Government of Kerala v. Joseph reaffirmed that clear and cogent evidence is required and that mere long possession does not become adverse possession without the required hostile character and animus possidendi.
Importantly, the authorities considered here do not directly decide whether cryptocurrency or NFTs can be acquired by adverse possession.
The better legal position, therefore, is that the traditional doctrine provides an analytical framework, but its extension to digital assets remains unsettled.
Possible Application to Digital Assets
The possibility of applying adverse possession to digital assets should therefore be treated as a question of legal development rather than established law.
A future court could potentially examine whether a particular digital asset constitutes a form of property capable of possession and whether an existing limitation provision applies to the relevant civil claim.
However, several additional questions would have to be resolved:
- What legally constitutes “possession” of a digital asset?
- Is control through a private key equivalent to possession?
- How can hostile possession be proved when wallet addresses are pseudonymous?
- When does the period of limitation begin?
- What limitation provision applies?
- Can the owner’s right be extinguished when the asset is intangible?
- Does the answer change depending on whether the asset is cryptocurrency, an NFT or a token representing another legal interest?
- How should courts deal with assets transferred through hacking, fraud or mistake?
- What happens when the relevant parties or transactions span multiple jurisdictions?
Until these questions are answered through legislation or judicial precedent, it would be unsafe to state that long-term digital control automatically produces ownership.
The Special Problem of Unlawful Control
The application of adverse possession becomes particularly controversial where digital control begins through wrongdoing.
Suppose B hacks A’s wallet and transfers an NFT to B’s own wallet. B then retains it for several years.
Treating the passage of time alone as sufficient to create ownership could produce a troubling result: the longer a wrongdoer retains stolen property, the stronger the wrongdoer’s claim would become.
That would sit uneasily with the traditional requirement that adverse possession must be established through clear, hostile and legally cognisable possession rather than mere physical or technical control.
The Supreme Court has repeatedly emphasised that mere long possession is insufficient. In Government of Kerala v. Joseph, the Court stressed the need for clear and cogent evidence before the rights of the true owner are displaced.
This does not mean that unlawful possession can never have legal consequences. It means that time cannot be treated as an independent source of ownership without first identifying the applicable legal rule governing the asset and the claim.
Tokenised Property: A Separate Question
Tokenised property should not be treated as identical to cryptocurrency or NFTs.
There may be at least three separate legal layers:
- The token
The blockchain-based digital representation. - The underlying asset or right
For example, land, securities, contractual rights or another economic interest. - The legal relationship between the token holder and the underlying asset
This may arise from contract, statute, registration, trust, corporate arrangements or another legal mechanism.
Consequently, control of a token representing land would not, by itself, mean that the holder has acquired title to the land.
Indian property law continues to impose legal requirements concerning transfers of immovable property. Section 54 of the Transfer of Property Act, 1882, for example, distinguishes a sale of immovable property from a mere contract for sale and prescribes the manner in which specified transfers are made.
Thus, a blockchain record cannot simply replace the legal requirements governing the underlying property.
Should Long-Term Control Ever Create Ownership?
There are arguments on both sides.
Argument in Favour
The strongest argument is legal certainty.
Limitation law reflects a policy that legal disputes should not remain open indefinitely. Where a person has exercised rights over property openly for a very long period and the true owner has failed to act, the law may eventually attach consequences to that inaction.
The Supreme Court’s adverse-possession jurisprudence recognises this role of limitation and prescription.
If digital assets become increasingly important forms of property, the law may eventually need a mechanism for dealing with stale claims involving them.
Argument Against
Digital assets are not identical to land.
A person can lose control of a cryptocurrency or NFT through hacking, phishing, compromised credentials or an unauthorised transaction. If mere retention for a predetermined period could create ownership, the rule could produce incentives for wrongful acquisition.
Moreover, the owner may not even know the identity of the person exercising control over a pseudonymous wallet.
Therefore, any future doctrine would need to balance certainty with protection against fraud and unlawful acquisition.
The Need for a Clear Legal Framework
The emergence of digital assets demonstrates the need to distinguish several concepts that may overlap technologically but remain different legally:
- Technical control – who can access or transfer the asset.
- Legal ownership – who has the legally recognised right to the asset.
- Beneficial ownership – who is entitled to the economic benefits.
- Possession or control – who presently exercises control over the asset.
- Unauthorised control – control exercised without the legal owner’s authority.
- Underlying property or right – the legal asset represented or associated with the token.
A future statutory framework could specify which forms of digital assets are capable of being possessed, what limitation periods apply to claims concerning them, and under what circumstances prolonged control can affect ownership.
Until such a framework develops, courts should be cautious about extending rules developed primarily around land to assets whose technological and legal characteristics are fundamentally different.
Conclusion
The question of whether digital assets can be acquired by adverse possession in India has no simple “yes” or “no” answer under the present legal framework.
Indian law clearly recognises adverse possession as a doctrine with serious consequences for the rights of a true owner. Section 27 of the Limitation Act, 1963 deals with extinguishment of rights, while Article 65 prescribes a twelve-year limitation period for suits for possession of immovable property or an interest therein based on title. The Supreme Court has repeatedly held that adverse possession requires more than long possession: it must satisfy requirements such as continuity, publicity, hostility and animus possidendi.
At the same time, the Supreme Court in Ravinder Kaur Grewal observed that the expression “any property” in Section 27 can include corporeal and incorporeal property. However, the same judgment recognised that Article 65 specifically concerns immovable property. This distinction prevents Section 27 from being treated as an automatic twelve-year adverse-possession rule for every intangible asset.
Digital assets create additional difficulties because technical control through a private key is not necessarily equivalent to legal ownership. Cryptocurrency, NFTs and tokenised physical assets also involve different legal relationships and should not be treated as a single category.
Accordingly, there is presently no clear Indian statutory framework establishing that cryptocurrency, NFTs or other digital assets can be acquired through traditional adverse possession. The existing doctrine can provide useful principles for analysing the problem, but it cannot simply be transplanted from immovable property to digital assets without addressing the questions of possession, hostility, publicity, continuity and, most importantly, the applicable limitation period.
The future challenge for Indian property law is therefore not merely to ask “Who controlled the digital asset for the longest period?” but to ask a more precise question:
“What legally recognised right did the person possess, what limitation rule governs that right, and can the passage of time lawfully extinguish the original owner’s claim?”
Until legislation or authoritative judicial decisions provide clearer answers, long-term control of a digital asset should not automatically be equated with ownership through adverse possession.
Frequently Asked Questions (FAQs)
1. What is adverse possession?
Adverse possession is a legal doctrine under which possession that is hostile to the true owner’s title, when the required legal conditions are satisfied for the prescribed period, can ultimately result in the owner’s rights being affected or extinguished.
2. What does Article 65 of the Limitation Act, 1963 provide?
Article 65 prescribes a period of twelve years for a suit for possession of immovable property or an interest therein based on title, beginning when the defendant’s possession becomes adverse to the plaintiff.
3. What is the significance of Section 27 of the Limitation Act?
Section 27 provides that when the period prescribed for instituting a suit for possession of property expires, the right of the person to that property is extinguished.
4. Can adverse possession apply to cryptocurrency in India?
There is currently no specific Indian statutory framework establishing traditional adverse possession of cryptocurrency. Whether existing limitation principles can apply to such assets remains an unsettled legal question.
5. Does controlling a crypto wallet mean that a person owns the cryptocurrency?
Not necessarily. Control of a private key provides technical ability to transfer the asset, but legal ownership depends upon the circumstances and the legal rights underlying the asset.
6. Can someone become the owner of an NFT merely by holding it for many years?
Long-term holding alone should not automatically create ownership. The applicable legal rights, the circumstances in which possession was obtained and the relevant limitation framework would have to be examined.
7. Does owning an NFT mean owning the copyright in the underlying artwork?
No. Ownership of an NFT and ownership of copyright are separate legal interests unless the transaction expressly and legally transfers the relevant copyright rights.
8. Does blockchain prove legal ownership?
Blockchain records can provide evidence of transactions and show which wallet currently controls a token. However, technical control does not necessarily establish legal title.
9. Why is adverse possession of digital assets difficult to establish?
Traditional adverse possession requires concepts such as open, continuous and hostile possession. Digital assets are controlled electronically, may be pseudonymous and can move rapidly between wallets and jurisdictions. The existing statutory limitation framework was not specifically designed for such disputes.
10. What is the main legal issue raised by digital adverse possession?
The central issue is whether long-term technical control of a digital asset can satisfy the legal requirements of possession and limitation strongly enough to affect the rights of the person who originally held the legally recognised interest.
