Welcome to Crypto Long & Short, our institutional newsletter featuring expert insights, news, and analysis for professional investors. This week, Tricia Gallagher, founder and principal of Treasury Solutions Info Tech, examines the need for a state-led approach to digital identity, highlighting the limitations of current systems and the importance of user control over personal data.
The United States has lost an estimated $5 trillion to fraud and improper payments, with most policy responses focusing on detection and enforcement rather than addressing the underlying issue of identity. Gallagher argues that a state-led approach, shifting away from centralized data silos to privacy-preserving, user-controlled credentials, is necessary to reduce fraud, improve transparency, and strengthen accountability.
The future of digital finance, she contends, will depend on whether systems prioritize both trust and individual rights, with identity serving as the bridge between the two.