Interesting Idea.

Arguably, the US dollar is a crypto-currency.

Although they print bills:

• most transactions are electronic
• there is nothing backing the dollar
• the rate at which the bills are printed is "relatively" constant
• you can exchange this currency for others (although there are higher fees and slower exchanges)

I don't think the gov't would truly want the transparency for federal spending, the general public would be outraged at the waste.

With fiat, if employers don't declare the money that an employee makes, the gov't can not tax it. The same would be true with a cryptocurrency.

If the gov't went with a blockchain/crypto approach, the number of public servant employees that would get laid off would be astronomical, unemployment would increase drastically.