Elon Musk has ignited debate in financial and technological circles by endorsing the idea of putting US Treasury spending on a blockchain. The proposal, aimed at increasing transparency and eradicating alleged fraud, has sparked discussions about its feasibility, benefits, and risks.
Yahoo Finance UK spoke with Symphony chief product officer Mike Lynch, to explore what such an initiative would entail.
Musk’s endorsement of blockchain transparency
In his role as head of the Department of Government Efficiency (DOGE), Elon Musk seems to have made it his mission to reform US federal agencies and drive greater efficiency. During a recent appearance on "The Joe Rogan Experience" podcast, the Tesla (TSLA) CEO expressed concerns about government spending fraud, alleging that billions of dollars are annually allocated to individuals lacking proper identification.
Musk believes blockchain technology could be the solution, as it offers enhanced transparency and accountability. By using blockchain, all transactions within US Treasury spending could be tracked in real time on a public ledger, ensuring full visibility and possibly reducing the potential for fraud.
In early February, Musk made a post on X.com saying: “Career Treasury officials are breaking the law every hour of every day by approving payments that are fraudulent or do not match the funding laws passed by Congress. This needs to stop now!”
When an X user responded by asking whether the Treasury “should be put on the blockchain so this doesn’t happen,” Musk replied: “Yes!”
His endorsement set off a wider debate on whether blockchain technology could be the key to eliminating alleged fraud in government spending.
Musk’s perspective is that blockchain’s transparency and immutability — ensuring all transactions are permanently visible for everyone to see — could serve as a deterrent against unauthorised financial activity.
But there could be logistical challenges. “In the year 2025, we should take everything seriously. And I think that's the ethos we should all live by,” Lynch told Yahoo Finance Future Focus. “I think the reality and the practicality of what putting US public spending on a blockchain could mean, we're still away from.
“I think what Musk is looking at and what the market is looking at is the efficiency, the transparency, and the benefits that blockchain can bring in tokenized assets.
"But in terms of just the scale of US Treasury operations, we're talking about almost $6tn last year. This is just infrastructure that does not exist today."
Given the complexity of placing US public spending on a blockchain, Lynch said that substantial work would be required if the concept were to be implemented.
Benefits of blockchain for public spending
Despite the infrastructural challenges, Lynch said there were potential benefits. “In a world where, as taxpayers, we feel we are owed some level of transparency from the government in terms of how they are spending our tax dollars, blockchain technology could be an incredibly transparent, immutable ledger for such transactions,” he said.
"However, do we really want total transparency for everything the government is spending its money on, that's a very different conversation, versus understanding specific agencies and specific operations and how that money is being spent."
One question surrounding Musk's blockchain for public spending vision is whether the government would utilise existing public blockchains like Ethereum (ETH-USD) or Cardano (ADA-USD) or create a proprietary, permissioned ledger.
According to Lynch, the latter is more likely, due to security concerns. “The US government would look at something that is more proprietary, more isolated, because there is still an inherent risk in the blockchain. There are risks inherent with public chains and digital wallets associated with them, and we've seen smart contracts associated with them get hacked," he said.
Recent incidents, such as the Bybit cryptocurrency exchange hack, have shown that blockchain technology is vulnerable to cyberattacks. Lynch highlighted that while the blockchain itself may be secure, the points of interaction — wallets, exchanges, and custody solutions — remain susceptible to breaches.
Public perception and security concerns
Another challenge to adoption is the public’s perception of blockchain security. As cryptocurrency hacks make headlines, the average taxpayer might hesitate to support a system that could be compromised.
Lynch said that while blockchain is robust, the risk lies in implementation. “We've all probably had friends, even close friends, who had a digital wallet on the laptop. That laptop has been stolen, so they've lost that digital wallet. So there is inherent risk, and that has to be addressed when we start to think about that kind of institutional scale usage of blockchain, like potentially using it for US government spending.”
Beyond traditional cybersecurity threats, there is also the looming challenge of quantum computing. With companies like Microsoft (MSFT) making rapid advancements in quantum technology, encryption methods that currently secure blockchain transactions could become obsolete within a few years.
“It’s not if, it’s when,” Lynch said. “The entire digital asset space needs to prepare for this shift.”
While Musk’s endorsement has sparked a conversation about financial transparency, the logistical and security challenges cannot be ignored, Lynch reiterated.
