Welcome to Crypto Long & Short, our institutional newsletter featuring insights and analysis for professional investors. This week, we explore the issue of digital identity and fraud, with expert insights from Tricia Gallagher. The estimated $5 trillion lost to fraud and improper payments in the US highlights the need for a new approach.
Gallagher argues that the current focus on detection and enforcement is insufficient and that a state-led, user-controlled identity system is necessary to address the underlying issue of identity. This approach would involve a shift away from centralized data silos and towards privacy-preserving, user-controlled credentials. Utah's Digital Identity Bill of Rights is cited as an example of a state taking the lead in this area, with its emphasis on user control, data minimization, and restricted surveillance. The newsletter also covers other key developments in the crypto space, including stablecoin regulation and the growth of the crypto Trading Card Game market.