Synopsis
Unlike conventional digital systems, where responsibility typically rests with a platform operator, data controller or service provider, blockchain-based systems can distribute responsibility across developers, validators, node operators, enterprise users, intermediaries and public authorities. That makes it harder to determine legal responsibility when disputes arise or systems fail.Listen to this article in summarized format
In India, blockchain is finding applications in areas such as document verification, digital credentials, land records and supply chain traceability, among others.
Hardeep Sachdeva, senior partner at law firm AZB & Partners, said India’s policy conversation has been mostly overshadowed by crypto assets because they raise immediate concerns around investor protection, financial stability, taxation, money laundering and cross-border flows. But that, he said, risks missing the bigger opportunity around blockchain as digital infrastructure.
“What India needs is a clearer distinction between regulating speculative digital assets and enabling responsible blockchain infrastructure,” Sachdeva said.
“The policy lens should not be limited to whether a token is tradable or taxable. It should also examine questions of data governance, interoperability, auditability, cybersecurity, smart contract enforceability, liability allocation, standards, public-private participation and the legal status of records maintained on distributed ledgers.”
Unlike conventional digital systems, where responsibility typically rests with a platform operator, data controller or service provider, blockchain-based systems can distribute responsibility across developers, validators, node operators, enterprise users, intermediaries and public authorities. That makes it harder to determine legal responsibility when disputes arise or systems fail.
India has begun deploying blockchain across a range of public-sector applications and has also put in place a National Blockchain Framework (NBF) to support adoption across governance and industry.
As the technology becomes part of a wider digital ecosystem, legal experts said the policy conversation can no longer remain confined to crypto assets alone and must also address the legal and governance questions that come with broader blockchain adoption.
“India’s regulatory focus has understandably been on virtual digital assets and the risks they present. However, blockchain itself is a broader technology that is already being used globally for applications such as trade finance, digital identity, healthcare records and public registries,” said Ankita Singh, managing partner at law firm A&P Partners.
She said that “while blockchain is permissible in India, there is still limited legal clarity on issues such as governance and the recognition of blockchain-based records”.
“A policy framework addressing these aspects would provide businesses with greater confidence to adopt blockchain beyond crypto-related use cases, she added.
Sachdeva said accountability would become one of the biggest governance challenges if blockchain becomes part of mainstream digital infrastructure.
“The law will therefore need to answer a simple but critical question: when something goes wrong, who is legally responsible?” he said.
According to experts, blockchain should also be recognised independently of crypto assets. “Blockchain as a technology (distributed ledger) has broader use cases than just cryptography, and deserves separate recognition,” said Anu Tiwari, partner at law firm Cyril Amarchand Mangaldas.
