The Indian government is working to establish a national framework to support the wider use cases of blockchain technology.

Sanjay Dhotre, the minister of state for electronics and IT (MeitY),  on Wednesday said that the government is drafting an approach paper on the National Level Blockchain Framework that discusses the potential of distributed ledger technology and the need for a shared infrastructure for different use cases, Coindesk reported.

Dhotre made the announcement in a letter addressing questions about blockchain from members of the Lok Sabha, the lower house of the Indian parliament.

In particular, MP Parvesh Sahib Singh Verma was asked whether the government had encouraged and conducted research into potential uses for blockchain technologies and if so, what the outcome of this research is.

In response, Dhotre wrote, “MeitY has identified Blockchain Technology as one of the important research areas having application potential in different domains such as Governance, Banking and Finance, Cyber Security and so on.”

According to the letter, the Indian government has already built the Distributed Centre of Excellence in Blockchain Technology, a project that develops and conducts research on blockchain technologies and their use cases.

The project is executed by government and research institutions, including the Centre for Development of Advanced Computing and the Institute for Development and Research in Banking Technology.

Under this initiative, the institutions have piloted a blockchain system for property registration at Shamshabad District, Telangana State, developed proof-of-concept solutions for Cloud Security Assurance, C-KYC and trade finance, said the Coindesk report.

Other ongoing projects include authentication of academic certificates with a proof-of-existence framework, and vehicle life cycle and hotel registry management.

There has been a slew of blockchain projects under development in India.

Last month, India’s information technology services provider Tech Mahindra announced it was teaming up with Netherlands-based blockchain application incubator Quantoz to provide secure digital payments.

Tata Consultancy Services has also launched a multi-brand consumer loyalty platform on R3’s enterprise blockchain, Corda, the same month.

India’s defense minister Rajnath Singh also stressed the potential use cases of blockchain in the defense industry in a public speech on November 4.

Regulatory challenges

While the country might be embracing blockchain, it has created regulatory challenges for cryptocurrency businesses, reported Coindesk.

The government proposed fines and jail time for cryptocurrency use in July, and Facebook announced it would not launch its Calibra crypto wallet subsidiary in India due to regulatory issues.

In April 2018, the Reserve Bank of India, the country’s central bank, initiated a major crackdown on the trade and purchase of cryptocurrencies such as bitcoin within its borders. RBI Deputy Governor Bibhu Kanungo declared that all RBI-regulated entities had to “stop having business relationships with entities dealing with virtual currencies forthwith and unwind the existing relationships in a period of three months’ time,” Cointelegraph reported.

This set a series of events in motion that would disrupt the blossoming crypto ecosystem in India. Crypto exchanges shut down due to regulatory pressure and crypto entrepreneurs were arrested. Despite this, in less than 18 months following the ban, Binance made the decision to buy out WazirX, India’s biggest crypto exchange.

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