India is no stranger to blockchain innovation. The country leads the world in crypto adoption by user numbers, yet the regulatory treatment of crypto remains cautious, even hostile.
But while tokens, exchanges, and Web3 startups struggle with taxation and compliance ambiguity, a quieter revolution is unfolding.
Governments, banks, and technology giants are steadily adopting blockchain, not as a speculative asset, but as core digital infrastructure.
This article explores this divide. It unpacks how India is simultaneously clamping down on crypto while embracing blockchain for everything from public services to cross-border banking.
Crypto: High Adoption, Higher Uncertainty
India topped Chainalysis' Global Crypto Adoption Index in 2023, with an estimated 107 million users. But the regulatory climate is far from friendly.
Profits from crypto assets are taxed at 30%, and a 1% TDS is levied on every transaction. There’s no formal licensing regime for exchanges, and several major platforms such as WazirX and BitBNS have faced investigations or hacks that further eroded investor trust.
As a result, many Indian Web3 startups have moved offshore, registering in friendlier jurisdictions like Dubai or Singapore.
For the average user, the combination of tax burdens and limited protections has dulled the excitement of earlier crypto bull runs.
Meanwhile, Blockchain Is Being Built—Quietly and at Scale
Beyond the noise around crypto, a more mature story is unfolding. Blockchain technology, the rails beneath digital currencies, is gaining serious ground across India’s public and private sectors.
Government-Led Innovation
Telangana is deploying blockchain for remote voting, digital identity verification, and fraud-resistant public registries.
Andhra Pradesh and Maharashtra have experimented with blockchain-based land and revenue records, reducing corruption and improving audit trails.
The Ministry of Electronics and Information Technology (MeitY) is developing a National Blockchain Framework that envisions integrating blockchain with AI, cloud, and IoT across sectors like healthcare, logistics, and governance.
Over 90 state-level blockchain pilots are currently active, from municipal grievance systems to smart contract-enabled procurement.
The e‑Rupee: Blockchain’s Most Visible Use Case
The Reserve Bank of India’s central bank digital currency (CBDC), the e‑Rupee, has advanced rapidly since its pilot launch in 2022.
Now running in both retail and wholesale environments, it has been integrated into daily banking systems by major players such as HDFC Bank, SBI, Axis Bank, and private fintechs like Cred.
Use cases go beyond peer-to-peer transfers:
IndusInd Bank is using e‑Rupee tokens to pay farmers for carbon credits.
Offline, programmable CBDC transactions are being tested in rural settings.
Interoperability with UPI is in progress, potentially allowing mass adoption through India's most-used payment infrastructure.
This signals a serious commitment: India is embedding it into its national payments system.
Enterprises and Banks: Institutional Rails, Not Just Retail Coins
The private sector is equally active in reimagining blockchain use.
Axis Bank, in collaboration with J.P. Morgan, has launched 24/7 USD clearing via blockchain infrastructure from GIFT City. This system reduces settlement time and FX friction, especially for Indian exporters operating in the Middle East and Europe.
Infosys, India’s IT giant, opened a fintech innovation centre in GIFT City focused on blockchain-based finance tools, including tokenised bonds and programmable payments.
PayPal-backed Mintoak acquired a CBDC-focused startup to strengthen blockchain-native payment rails for small merchants.
Big Tech & Telecom: Scaling Blockchain to the Masses
In perhaps the biggest scale play, Reliance Jio is partnering with Polygon Labs to bring Web3 and blockchain capabilities to over 450 million users.
Through the JioSphere platform and pilot programs like NFT-based event tickets and decentralised identity, Jio aims to integrate blockchain into everyday digital life.
And it’s not alone.
The Open Network for Digital Commerce (ONDC), supported by players like Microsoft and Amazon, is exploring blockchain to improve trust, logistics, and traceability in India’s e-commerce ecosystem.
A Strategic Divide: Regulate Crypto, Build Blockchain
What emerges is a clear duality:
Crypto, as a financial asset class, is being restrained through taxation, surveillance, and compliance hurdles.
Blockchain, as infrastructure, is being actively nurtured by the state and leveraged by institutions.
This decoupling may appear contradictory, but it reflects a deliberate strategy. By distancing blockchain infrastructure from speculative trading, India is trying to preserve innovation while maintaining financial stability.
Conclusion: Aligning the Rails and the Rules
India’s blockchain landscape is split but not broken. While crypto regulation remains fragmented, the infrastructure it relies on is gaining unprecedented traction.
From digital currency pilots and cross-border payments to land records and supply chain solutions, blockchain is maturing into a foundational layer of India’s digital economy.
The challenge ahead is not just regulatory clarity for crypto's coordination. India must ensure that blockchain innovation, whether public or private, doesn’t get stranded in siloed use cases.
A unified strategy balancing openness, security, and compliance will be key to unlocking the next decade of digital growth.
India is no longer just experimenting with blockchain.
It’s built with it.
The question is: can it bring all the pieces together?
Edited by Annette George
