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Software Development based on Scrum Agile in a distributed development environment plays a pivotal role in the contemporary software industry by facilitating software development across geographic boundaries. However, in the past different frameworks utilized to address the challenges like communication and collaboration in scrum agile distributed software development (SADSD) were notably inadequate in transparency, security, traceability, geographically dispersed location work agreements, geographically dispersed teamwork effectiveness, and trust. These deficiencies frequently resulted in delays in software development and deployment, customer dissatisfaction, canceled agreements, project failures, and disputes over payments between customers and development teams. To address these challenges of SADSD, this paper proposes a new framework called ChainAgile, which leverages blockchain technology. ChainAgile employs a private Ethereum blockchain to facilitate the execution of smart contracts. These smart contracts cover a range of functions, including acceptance testing, secure payments, requirement verification, task prioritization, sprint backlog, user story design and development and payments with the automated distribution of payments via digital wallets to development teams. Moreover, in the ChainAgile framework, smart contracts also play a pivotal role in automatically imposing penalties on customers for making late payments or for no payments and penalties on developers for completing the tasks that exceed their deadlines. Furthermore, ChainAgile effectively addresses the scalability limitations intrinsic in blockchain technology by incorporating the Interplanetary File System (IPFS) is used for storage solutions as an off-chain mechanism. The experimental results conclusively show that this innovative approach substantially improves transparency, traceability, coordination, communication, security, and trust for both customers and developers engaged in scrum agile distributed software development (SADSD).