<p>There are potential applications for Blockchain Technology (BCT) that are in line with sustainability concepts. One way this application might help improve the efficiency of operations of Supply Chains (SCs) is by focusing on two critical areas traceability and transparency. Many Small and Medium Enterprises (SMEs) delay using this technology for various reasons. In this investigation, we employed Interpretive Structural Modelling (ISM) and a Matrix Impact Cross-Reference Multiplication Applied to a Classification (MICMAC) to analyze different challenges to Indian SMEs’ adoption of BCT. The results reveal the primary reasons that limit companies’ use of BCT: a lack of formal acknowledgment and support, too cumbersome processes, and insufficient government aid. A wide range of unfavourable effects exists because of the fundamental challenges throughout the implementation. It is abundantly evident that the issues of market volatility and trust are interrelated, and to address them, human interactions require managing both primary and secondary barriers. Several of these limitations are referred to as ‘connection factors,’ as analyzed by MICMAC. These factors demonstrate how these limitations are connected to SMEs’ challenges when using BCT. This research discusses several potential solutions to overcome the current challenges and contributes to the body of knowledge by offering a new perspective on the barriers to BCT adoption in sustainable SCs within the context of Indian SMEs. These solutions include new regulations, incentives, investments in BCT, and initiatives that foster talent development. The full potential of BCT to improve the long-term profitability of SC operations and speed their adoption may be achieved if human factors, processes, and technology can overcome these concerns. The proposed approach presented in this research will benefit legislators, managers of SCs, and industry professionals.</p>