PART A: TRAI DLT PLATFORM - TELECOM COMPLIANCE

This is the most litigated DLT in India.

Regulation: TRAI Telecom Commercial Communications Customer Preference Regulations, 2018 [TCCCPR 2018]

Rule: Every entity sending commercial SMS or voice must register as Principal Entity on DLT platforms of telcos - Jio DLT, Airtel DLT, Vodafone DLT, BSNL DLT.

Only platforms with built-in DLT-registered templates can send messages.

What is supervision?

1. Registration: Entity, Headers (Sender ID e.g., SBI SMS), Content Templates must be pre-registered. Template approval takes 2-3 weeks.
2. 1600-Series: Since 2024, BFSI entities regulated by RBI, SEBI, PFRDA, IRDAI must use 1601xxxxxx series for service/transactional calls. OTP and promotional must use separate series.
3. Consent Scrubbing: Every SMS/call is scrubbed against NDND registry on DLT ledger in real-time.
4. Template ID Binding: Every outbound message must carry Template ID in signalling.

Non-Compliance Penalty:

• TCCCPR financial penalty Rs. 2 lakh to Rs. 10 lakh per instance
• Telecom blacklisting up to 1 year across all resources - operationally catastrophic
• Parallel action by sector regulator: RBI, SEBI, IRDAI, PFRDA
• DPDP Act 2023 penalty if personal data breach

Case Law: Delhi High Court writs against TRAI by banks challenging blacklisting have consistently upheld TRAI power to block at network level for unregistered traffic.

PART B: BLOCKCHAIN DLT PLATFORM - FINANCIAL REGULATORY COMPLIANCE

No single comprehensive crypto law exists yet. Oversight is shared.

1. RBI Supervision:
RBI regulates DLT if it involves payment, CBDC, or currency.

• CBDC e₹ pilot: RBI Digital Rupee uses permissioned DLT.
• RBI's 2018 Circular prohibiting banks from dealing in virtual currencies was struck down.

2. SEBI Supervision:

• Securities-like tokens from April 2025: SEBI is primary regulator
• SEBI Fintech Sandbox: DLT projects must prove genuine need to test, direct benefits, no risk to financial system. Must comply with investor protection, KYC/AML.
• Demat 2.0 - Live Example Sept 2026: SEBI + RBI launched pilot at Global Fintech Fest 2026. Corporate bonds can now be issued, held and settled as tokenised instruments on DLT infrastructure. Depository holds private keys. Settlement via atomic DLT DvP using Digital Rupee - first convergence of DLT + CBDC in major market.

SEBI proposal for supervision:

• Formally amend Depositories Act, 1996 to recognise DLT entries as conclusive proof of title
• Issue joint notification under Section 23 PSS Act, 2007 granting atomic DLT transactions statutory settlement finality
• Mandatory SEBI accreditation for smart-contract auditors before mainnet deployment

3. IFSCA Supervision - GIFT City:
IFSCA regulates DLT platforms for token issuance under IFSCA FinTech Incentive Scheme.

4. FIU-IND + PMLA - KYC/AML Supervision:

Since March 2023, Ministry of Finance broadened Prevention of Money Laundering Act (PMLA) to cover Virtual Digital Assets (VDAs).

Every crypto-asset service provider, DLT exchange, broker must:

• Register with FIU-IND as Reporting Entity
• Mandatory KYC under PMLA Rules
• File STR/SAR
• Maintain 5-year transaction logs

Failure = penalty + blocking of FIU non-compliant exchanges - e.g., Binance, Kucoin were show-caused in Dec 2023.

5. Tax Supervision - Income Tax Act

• 30% flat tax + 1% TDS under Sec 194S on VDA transfer, zero loss offset. Survival depends on trading only on FIU-registered exchanges.

PART C: CASE LAWS - DLT/BLOCKCHAIN

1. Internet and Mobile Association of India v. Reserve Bank of India (2020) 10 SCC 274 - THE Landmark

• Facts: RBI issued circular April 2018 prohibiting banks and financial institutions from providing services to crypto exchanges.
• Supreme Court struck down circular as unconstitutional, violating Art. 19(1)(g) right to trade.
• Held: RBI has power to regulate VCs, but complete exclusion from banking was disproportionate, especially when no law prohibited crypto trading. RBI could not demonstrate actual harm.
• Ratio: Holding or trading cryptocurrency is not illegal in India. Regulation must be reasonable, evidence-based and minimally invasive.
• For DLT platforms: You cannot be denied banking just because you use DLT. Bank must show risk-based reason.

2. Harish B.V. v. Union of India & Ors.
Follow-up writ seeking regulation. SC directed government to bring framework.

3. Equity Intelligence AIF Trust v. CBDT & Anr. 2025 DHC 6170-DB

• CBDT Circular 13/2014 required Category III AIFs to list investor names in trust deed for determinate trust.
• Delhi HC read down circular. Held SEBI framework makes it impossible to name investors before registration. Beneficiaries ascertainable via contribution agreements is enough.
• SC refused to interfere in 2026. Important for DLT tokenized AIFs - trust classification still determinate even if investors on-chain.

4. K.S. Puttaswamy v. Union of India (2017) 10 SCC 1
Privacy judgment used for DLT KYC - DLT platform storing personal data must satisfy proportionality under DPDP Act 2023.

5. SEBI vs SEBI-registered DLT vendors (Sandbox Orders)
SEBI orders in sandbox have laid down: No exemptions from existing principles of Investor Protection, KYC, AML even in sandbox.

Compliance Checklist for DLT Platform Operator in India 2026

If you are building a blockchain DLT platform:

1. Structure: Are you payment system (RBI), securities platform (SEBI), or IFSCA entity? Register accordingly. All Indian crypto exchanges must be mandatorily registered with SEBI under proposed unified framework.
2. FIU-IND: Get FIU registration BEFORE launch - mandatory.
3. KYC/AML: RBI Master Direction on KYC + SEBI KRA + PMLA e-KYC. Document at onboarding, per transaction >50K.
4. TRAI DLT: If you send OTPs or SMS alerts, separately register as Principal Entity on telecom DLT.
5. Data: Store ledger nodes in India if handling payments - RBI data localization.
6. Audit: Get smart-contract audit by SEBI-accredited auditor.