Finance professor warns about dangers of using crypto tech at US agencies

A finance professor has warned about the dangers of integrating cryptocurrency technology into the United States government systems. According to Hilary J. Allen, a securities and banking law professor at the American University in Washington D.C., using the technology poses “real dangers.”

In a statement to state senators this week, Allen mentioned that integrating the technology could leave Americans who rely on federal payments vulnerable to cyber attacks. She added that they could also be exposed to operational risks if the Trump administration gives Elon Musk and his Department of Government Efficiency (DOGE) team the go-ahead to use it for federal payments.

Allen mentioned in her testimony to the state senators that using blockchain, the decentralized digital ledger system associated with digital assets like Bitcoin, as a means for government payments will make the transactions visible to bad actors, putting people relying on such payments in a vulnerable state.

Finance pros clamor against blockchain payment system

The university professor noted that it was a bad move to substitute the current system in favor of the blockchain system. “DOGE employees’ access to the software systems used to affect federal government payments, as well as DOGE’s ambitions to substitute new blockchain-based systems as government infrastructure may leave American citizens who rely directly or indirectly on payments from the government more vulnerable to the effects of cyber-attacks and careless errors,” she said.

Allen testified before the Michigan Senate Oversight Committee on March 19, with Democrats using this month to look into the impact of the activities of the Trump administration. A previous meeting on March 5 had focused on the pause of federal grant and loan payment, which has harmed several programs including Head Start.

The finance tutor’s testimony comes after weeks of nationwide concerns about DOGE staff entering into the database of agencies to control payments and information belonging to millions of Americans in search of government waste. The team was allowed to access the Treasury Department’s payment systems last month, causing an uproar over the department’s Bureau of Fiscal Service, which oversees more than $5 trillion in disbursements to government programs like Social Security and Medicare, tax refunds, and federal salaries.

An incident that occurred some weeks ago also focused on the risks posed by using the aggressiveness of a young team to tinker with government computer systems. One DOGE staffer gained the ability to rewrite the system payment code, which Trump officials later attributed to an accident. The activities of DOGE has also been subject to legal roadblocks, with the department blocked from accessing social security systems that hold personal data on millions of Americans.

Allen raises alarm about DOGE activities

According to recent reports, a judge ruled this week that the dismantling of the United States Agency for International Development (USAID) was likely unconstitutional. The Trump administration has moved forward to propose renaming it while putting its procurement affairs on a blockchain. In addition, the administration is also looking at the likelihood of using blockchain at the United States Housing and Urban Development (HUD) to monitor grants and issue payments in crypto.

The finance professor, in her statement, told lawmakers that an unintended failure of the government payment system would disrupt the economy and could cause a default on the United States Treasury securities. She currently teaches corporate law and financial regulation in addition to being the author of a book that lists the threats that fintech innovations pose to the financial system.

The finance professor added that DOGE staffers, in their quest to remove redundancies, may not fully understand redundancies created for system security reasons and could mistakenly create vulnerabilities that could be exploited through complex networked systems. She noted that some agencies that send direct payments to Americans realty on the aged COBOL programming language. She noted that the programming language has not been taught since the 90s. “So it would be unlikely that those young employees would know how to navigate a COBOL system carefully,” Allen said.

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