Tackling Digital Fraud: The Case for State-Led Identity Solutions

Welcome to Crypto Long & Short, our weekly institutional newsletter. In this edition, Tricia Gallagher, founder and principal of Treasury Solutions Info Tech, examines the issue of digital fraud and the need for a state-led identity framework. The US has lost an estimated $5 trillion to fraud and improper payments, with most policy responses focusing on detection and recovery rather than addressing the underlying issue of identity. Gallagher argues that the current system, which relies on broad, one-time consent frameworks, is inefficient and expands the surface area for misuse and security breaches. She advocates for a shift towards a user-controlled, state-led identity framework, where individuals have meaningful visibility and control over their personal data. This approach, she suggests, can help reduce fraud, improve transparency, and strengthen accountability. The newsletter also features headlines from the week, including developments in stablecoins, geopolitics, and decentralized finance, as well as a chart of the week highlighting the surge in crypto Trading Card Game gacha volumes.