BLOCKCHAIN IN THE INDIAN FINANCIAL SECTOR: LEGAL CHALLENGES, REGULATORY GAPS, AND OPPORTUNITIES FOR INNOVATION

AUTHOR(S) – SPARSH RATHI* & DR. SHEFALI RAIZADA**

* STUDENT OF LAW, AMITY LAW SCHOOL, NOIDA

** FACULTY OF LAW, AMITY LAW SCHOOL, NOIDA

BEST CITATION – SPARSH RATHI & DR. SHEFALI RAIZADA, BLOCKCHAIN IN THE INDIAN FINANCIAL SECTOR: LEGAL CHALLENGES, REGULATORY GAPS, AND OPPORTUNITIES FOR INNOVATION, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 5 (8) OF 2025, PG. 225-230, APIS – 3920 – 0001 & ISSN – 2583-2344.

Abstract

Blockchain technology has emerged as a transformative innovation in the financial sector, enabling decentralized, secure, and transparent transaction systems. In India, its application within banking and financial services presents significant opportunities for cost savings, efficiency, and financial inclusion. However, the decentralized nature of blockchain raises complex legal and regulatory challenges. Current Indian laws—including the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949, the Payment and Settlement Systems Act, 2007, and the Information Technology Act, 2000—do not yet provide a comprehensive legal framework for blockchain adoption. Issues surrounding scalability, cybersecurity, anti-money laundering compliance, and cross-border regulation further complicate blockchain’s integration into existing financial systems. This paper explores the definition, features, and working mechanisms of blockchain, examines its financial applications and legal implications, and evaluates the regulatory challenges and opportunities it presents. The study underscores the urgent need for a unified and adaptive legal framework to ensure blockchain’s alignment with India’s financial regulatory architecture while harnessing its full potential.