SDG 9: Industry, Innovation & Infrastructure | SDG 17: Partnerships for the Goals
Institutions: Ministry of Finance | Reserve Bank of India
On 19 September 2025, the IMF released an updated working paper titled “Blockchain Consensus Mechanisms: A Primer for Supervisors (2025 Update).” The paper explains how different ways of verifying transactions on blockchains—like proof-of-work, proof-of-stake, and hybrid systems—affect supervision and regulation. It also looks at newer technologies such as layer-2 solutions, which make blockchains faster and more scalable.
The update highlights that consensus design has real-world consequences for regulators. It can influence how transparent systems are, how much energy they use, how easy they are to audit, and how resilient they are against risks.
As India explores uses of blockchain in payments, digital assets, and CBDCs, this guide offers a roadmap for regulators like RBI and SEBI. It helps them balance innovation with the need to protect consumers, ensure financial stability, and manage risks.
Blockchain & Consensus Design
Blockchain is a digital ledger where transactions are grouped in “blocks” and linked securely, making records transparent and hard to tamper with.
Consensus design is the method that ensures everyone in the network agrees on which transactions are valid. Common models include Proof-of-Work (PoW), where computers solve puzzles, and Proof-of-Stake (PoS), where participants lock tokens to validate transactions.
The design matters because it affects how secure, fast, energy-efficient, and transparent the system is.
Also, for innovations like the RBI’s Digital Rupee pilot and blockchain experiments in land records, supply chains, and payments, consensus design shapes whether these systems can scale securely while staying affordable and energy-efficient.
Relevant Question for Policy Stakeholders:
How can Indian regulators adopt blockchain innovations while keeping them safe, transparent, and energy-efficient?
Follow the full paper here: IMF: Blockchain Consensus Mechanisms – Primer for Supervisors (2025 Update)