Musk’s government-efficiency blockchain: What could go wrong and what could go right?
Opinion by: James Strudwick, executive director, Starknet Foundation
The outlook surrounding the use of new technologies has shifted in Washington. Tesla CEO and presidential adviser Elon Musk’s proposition to incorporate blockchain technology into the US Treasury has placed blockchain and its use for state finances at the forefront of the global debate. According to Musk, much of this drive is rooted in the concern over the unsustainability of current government spending. With its immutable ledgers and transparent audit trails, blockchain is waiting in the wind, offering a potential solution to managing vast public finances.
Musk advocates for a unified information system that can track real-time payments, credentials and government resources, spurring a debate within the fintech community about the pros and cons of introducing such a tool at the government level. The idea is compelling, as the description on the blockchain tin effectively promises accountability, traceability and streamlined operations. The shift here, namely to a blockchain-powered government infrastructure, presents several challenges that may prove to be beyond what the new administration has expected thus far.
Blockchain as state appendage
A concern for stakeholders orbiting the blockchain world revolves around the sheer scale of government operations. Every day, the US government handles thousands of transactions across various departments. The feasibility of Musk’s vision is put into question simply as a result of its own complexity. The provable security that blockchain technology must offer while handling millions of daily transactions without buckling under the load to succeed at this scale is enormous.
A proposed solution by Musk is a hybrid model that uses “Validium” zero-knowledge rollups. The speed and efficiency of modern ZK-rollups, which can handle hundreds of millions of transactions daily, have the potential to make sure each citizen’s share of government transactions is intact and verifiable. The technology’s rapidly evolving nature, scaling to handle even higher transaction volumes in the coming years, indicates that this could be achievable.
Unfortunately, this in itself comes with its own hurdles, particularly when integrating public services, which tend to operate in silos.
The human question
The great irony here is that Musk’s declarations of government inefficiency as a reason for the ongoing shakeups could be one of the biggest reasons not to go ahead with the plan. The real obstacle here is not so much technological as it is deeply, irrevocably human. The transition from archaic legacy systems to the more modern infrastructure of blockchain requires not just software updates but an entire reprogramming of the workforce. Government employees embedded in bureaucracy are used to outdated systems, and retraining them will be no small task.
Recent: US housing dept mulls blockchain, stablecoin to pay and monitor grants: Report
Moreover, current government databases are a labyrinth of poorly documented, indecipherable data. Extracting and migrating this data to a blockchain infrastructure is itself a task that may require serious investment. For all its elegance, blockchain wasn’t built to contend with such inefficiency. Despite its potential for handling complex, distributed environments, the difficulties present in the system itself could make the transition more complicated than the hassle is worth.
Balancing transparency and confidentiality
Transparency of federal spending is also a factor worth highlighting. The innate strength of blockchain and its much-lauded appeal is its strength. It permits citizens to track how public funds are allocated and spent. Musk’s premise could foster a so-far unseen level of accountability, which makes transactions, every delegation of power and every resource distribution visible to the public in real-time.
The problem is that sensitive government data, classified information or personal identification could be dangerously exposed on a public blockchain. Musk’s response is to try to tether sensitive data to private channels in the blockchain and ensure that only individuals with the appropriate authorization or from specific departments can access confidential information. Theoretically, this addresses the security concern while allowing blockchain’s public verifiability.
Musk’s offer could lead to a more efficient, accountable system. The social drive behind this is the longstanding criticism of wasted spending and resource misallocation. There is also a possibility of strengthening democratic processes by holding public officials more accountable. A decentralized authority has the broader impact of empowering citizens through real-time access.
There is a forward-thinking aspect to the vision. It raises a profound question. Technology could address human governance challenges, but we run the risk of a fundamental shift in how we understand privacy and accountable authority. As we question the nature of governance, it warrants careful consideration of the role of blockchain and what it could ultimately mean for the future of society as a whole.
Opinion by: James Strudwick, executive director, Starknet Foundation.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
The US Treasury Department sanctioned eight cryptocurrency wallet addresses linked to Russian crypto exchange Garantex and the Houthis.
The United States Office of Foreign Assets Control (OFAC) sanctioned eight crypto addresses that data from blockchain forensic firms Chainalysis and TRM Labs had linked to the organizations. Two are deposit addresses at major crypto platforms, while the other six are privately controlled.
Visualization of transaction flow related to OFAC sanctions. Source: Chainalysis
The addresses in question reportedly moved nearly $1 billion worth of funds linked to sanctioned entities. Most of the transactions funded Houthi operations in Yemen and the Red Sea region.
Slava Demchuk, a crypto-focused money laundering specialist and United Nations Office on Drugs and Crime consultant told Cointelegraph that “the inclusion of Houthi-linked wallets reflects a broader recognition of crypto’s role in geopolitical conflicts and terrorism financing.” He added:
“The implications are far-reaching — compliance frameworks must adapt swiftly, attribution efforts will intensify, and decentralized platforms may face increased scrutiny.“
Demchuk highlighted that the situation reshapes the regulatory landscape. According to him, crypto “is now firmly within the scope of international security.
Who are the Houthis?
The Houthis, also known as Ansar Allah, are a Yemeni political and armed movement that emerged from the Zaidi Shia community. Originating as a revivalist and reformist group, they later became a major force in Yemen’s ongoing conflict.
Related: US DOJ says it seized Hamas crypto meant to finance terrorism
In recent years, the Houthis have engaged in attacks against both military and civilian vessels in the Red Sea with missiles and drones. In January, US President Donald Trump designated the group as a foreign terrorist organization.
The announcement noted that “the Houthis’ activities threaten the security of American civilians and personnel in the Middle East, the safety of our closest regional partners, and the stability of global maritime trade.” The group was recently struck by a US bombing campaign.
Related: Binance claims’ no special relationship’ with Hamas, argues to dismiss lawsuit
Garantex: Russia’s crypto laundromat
Garantex is a Russian crypto exchange that was sanctioned and shut down in early March after purportedly helping money-laundering efforts. At the time, Tether — the leading stablecoin operator and issuer of USDt — froze $27 million in USDt on the platform, forcing it to halt operations.
The platform has reportedly shifted millions of dollars as it sought to reboot under its new brand, “Grinex.”
In mid-March, officials with India’s Central Bureau of Investigation announced the arrest of Lithuanian national Aleksej Bešciokov, who was alleged to have operated the cryptocurrency exchange Garantex.
The arrest of the alleged Garantex founder was based on US charges of conspiracy to commit money laundering, conspiracy to operate an unlicensed money-transmitting business and conspiracy to violate the International Emergency Economic Powers Act.
Magazine: Financial nihilism in crypto is over — It’s time to dream big again
Lawmakers in the US states of Minnesota and Alabama filed companion bills to identical existing bills that if passed into law, would allow each state to buy Bitcoin.
The Minnesota Bitcoin Act, or HF 2946, was introduced to the state’s House by Republican Representative Bernie Perryman on April 1, following an identical bill introduced on March 17 by GOP state Senator Jeremy Miller.
Meanwhile, on the same day in Alabama, Republican state Senator Will Barfoot introduced Senate Bill 283, while a bi-partisan group of representatives led by Republican Mike Shaw filed the identical House Bill 482, which allows for the state to invest in crypto, but essentially limits it to Bitcoin (BTC).
Twin Alabama bills don’t explicitly name Bitcoin
Minnesota’s Bitcoin Act would allow the state’s investment board to invest state assets in Bitcoin and other cryptocurrencies and permit state employees to add crypto to retirement accounts.
It would also exempt crypto gains from state income taxes and give residents the option to pay state taxes and fees with Bitcoin.
Source: Bitcoin Laws
The twin Alabama bills don’t explicitly identify Bitcoin, but would limit the state’s crypto investment into assets that have a minimum market value of $750 billion, a criterion that only Bitcoin currently meets.
26 Bitcoin reserve bills now introduced in the US
Introducing identical bills is not uncommon in the US and is typically done to speed up the bicameral legislative process so laws can pass more quickly.
Bills to create a Bitcoin reserve have been introduced in 26 US states, with Arizona currently the closest to passing a law to make one, according to data from the bill tracking website Bitcoin Laws.
Arizona currently leads in the US state Bitcoin reserve race. Source: Bitcoin Laws
Pennsylvania was one of the first US states to introduce a Bitcoin reserve bill, in November 2024. However, the initiative was reportedly eventually rejected, with similar bills also killed in Montana, North Dakota, South Dakota and Wyoming.
Related: North Carolina bills would add crypto to state’s retirement system
Montana, North Dakota, Pennsylvania, South Dakota and Wyoming are the five states thathave rejected Bitcoin reserve initiatives. Source: Bitcoin Laws
According to a March 3 report by Barron’s, “red states” like Montana have faced setbacks to the Bitcoin reserve initiatives amid political confrontations between the Democratic Party and the Republican Party.
Additional reporting by Helen Partz.
Magazine: Financial nihilism in crypto is over — It’s time to dream big again
Update (April 3, 5:43 am UTC): This article has been updated to add information on the STABLE Act and GENIUS Act.
The US House Financial Services Committee has passed a Republican-backed stablecoin framework bill, which will now head to the House floor for a full vote.
The Committee passed the Stablecoin Transparency and Accountability for a Better Ledger Economy, or STABLE Act, with a 32-17 vote on April 2, with six Democrats voting in favor.
The bill was introduced on Feb. 6 by committee Chair French Hill and the chair of its Digital Assets Subcommittee, Bryan Steil — reportedly drafted with the help of the world’s largest stablecoin issue, Tether.
Source: Financial Services GOP
The bill would provide rules around payment stablecoins, a crypto token tied to a currency such as the US dollar, and aims to ensure issuers give information about their business and how they back their tokens.
During an earlier markup session, the committee’s leading Democrat, Maxine Waters, who later voted against the bill, criticized her Republican peers for “setting an unacceptable and dangerous precedent” with the STABLE Act.
She said President Donald Trump could use the bill to allow his family’s stablecoin to be used in government payments, and argued the bill validates Trump “and his insiders’ efforts to write rules of the road that will enrich themselves at the expense of everyone else.”
In late March, the Trump family’s World Liberty Financial crypto venture launched a stablecoin, World Liberty Financial USD (USD1). Meanwhile, the US Housing Department, which oversees social housing, was reportedly looking to experiment with using stablecoins for some of its functions.
Stablecoin GENIUS Act also weaves through Congress
Other stablecoin-related bills are also working their way through Congress, including the Republican-led Guiding and Establishing National Innovation for US Stablecoins, or GENIUS Act, which lays out oversight and reserve rules for issuers.
Related: Crypto has a regulatory capture problem in Washington — or does it?
The US Senate Banking Committee voted through the GENIUS Act in an 18-6 vote on March 13, after Senator Bill Hagerty, one of the bill’s co-sponsors, updated it following consultation with the Committee’s Democrats.
Before the vote, Democratic Senator Kirsten Gillibrand said the updated GENIUS Act made “significant improvements to a number of important provisions” in areas such as consumer protections and authorized stablecoin issuers.
Both the STABLE Act and GENIUS Act will now wait until debate time on the floor of the House and Senate, respectively, before they head for a floor vote.
Crypto journalist Eleanor Terrett reported on X that two unnamed crypto lobbyists said there is likely to be “a coordinated push behind the scenes over the next few weeks to get the two bills to mirror each other, as there are still some differences between them.”
Doing so would “avoid having to set up a so-called conference committee which is formed so members from both chambers can negotiate to create a final version of the bill everyone agrees on,” she added.
Magazine: How crypto laws are changing across the world in 2025
-
Sports2 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports12 months agoStory injured on diving stop, exits Red Sox game
-
Sports1 year agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business3 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway