The Author, Saraswati is a Practicing Advocate.
Blockchain is a decentralised digital ledger technology that records transactions across a distributed network without the involvement of a central authority. Its core features—immutability, transparency, pseudonymity, and automation through smart contracts—challenge conventional legal frameworks that are built around centralised control, identifiable intermediaries, and territorial jurisdiction.
Indian Legal Position: Fragmentation and Uncertainty
India does not have a blockchain-specific statute. Blockchain applications are indirectly regulated through the Information Technology Act, 2000, Indian Contract Act, 1872, and sector-specific regulations. These laws neither recognise smart contracts nor provide clarity on liability, jurisdiction, or enforcement in decentralised systems, resulting in regulatory ambiguity.
In Internet and Mobile Association of India v. Reserve Bank of India (2020), the Supreme Court struck down the RBI circular restricting banking access to cryptocurrency businesses, holding that such businesses are protected under Article 19(1)(g) of the Constitution.¹ However, the Court refrained from framing regulatory principles for blockchain or crypto assets, thereby leaving a legislative vacuum.
Similarly, in Anuradha Bhasin v. Union of India (2020), the Supreme Court held that state action involving technology must satisfy legality, necessity, and proportionality.² Despite this constitutional mandate, blockchain governance in India remains largely executive-driven without parliamentary legislation.
The need for blockchain regulation has been repeatedly acknowledged by expert committees, yet their recommendations remain largely unimplemented.
The Inter-Ministerial Committee (IMC) on Virtual Currencies (2019) recognised the underlying potential of blockchain technology while recommending a ban on private cryptocurrencies.³ Importantly, the Committee distinguished between cryptocurrency misuse and blockchain innovation, recommending that blockchain applications be encouraged through regulatory clarity. However, no comprehensive blockchain legislation followed.
The Standing Committee on Finance (2021) examined challenges related to cryptocurrencies and blockchain technology and explicitly recommended the formulation of a clear regulatory framework to protect investors while fostering innovation.⁴ The Committee cautioned against a blanket ban and emphasised the need for nuanced regulation.
Further, NITI Aayog has consistently advocated the adoption of blockchain in governance, land records, supply chains, and public service delivery. In its discussion papers, NITI Aayog highlighted the absence of a legal framework as a major impediment to large-scale blockchain deployment in India.⁵ Despite policy enthusiasm, legislative action remains absent.
Data Protection Conflict: India vs European Union
A critical legal challenge arises from the conflict between blockchain immutability and the Digital Personal Data Protection Act, 2023, which mandates consent withdrawal and data erasure. This renders compliance by public blockchains practically impossible.
In contrast, the European Union, under the GDPR, has issued guidance enabling blockchain compliance through off-chain storage and data minimisation. Additionally, the EU’s Markets in Crypto-Assets Regulation (MiCA) provides a comprehensive framework governing crypto assets and service providers.⁶ India lacks any comparable statute.
Smart Contracts and Liability: Comparative Perspective
India has not recognised smart contracts either statutorily or judicially. This stands in contrast to the UK Jurisdiction Taskforce (2019), which affirmed that smart contracts are legally enforceable provided traditional contract requirements are met.⁷
In the United States, courts have begun engaging directly with blockchain-related liability. In SEC v. Ripple Labs Inc. (2023), the court rejected a blanket classification of crypto transactions and adopted a nuanced, transaction-based approach.⁸ Indian courts have yet to develop any similar jurisprudence.
Criminal Law and Under-Regulation
Blockchain’s use in money laundering, ransomware, and cybercrime has increased. Yet India continues to rely on traditional penal provisions without imposing specific compliance obligations on blockchain intermediaries. In Shreya Singhal v. Union of India (2015), the Supreme Court warned against vague regulation of technology.⁹ Ironically, blockchain in India suffers from the opposite problem—under-regulation, enabling misuse without accountability.
Conclusion
Judicial pronouncements, committee reports, and comparative jurisprudence unanimously point towards one conclusion: India’s technology-neutral and fragmented approach is no longer adequate. While expert committees have recognised blockchain’s potential and risks, the absence of a blockchain-specific legal framework has resulted in uncertainty, misuse, and missed opportunities.
