Welcome to Crypto Long & Short, our institutional newsletter featuring expert insights, news, and analysis for professional investors. This week, Tricia Gallagher explores the concept of state-led digital identity and its potential to combat fraud. 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 a state-led approach, where individuals have control over their personal data, is essential for creating a secure and trustworthy digital identity framework.
She cites the example of Utah, which has introduced a Digital Identity Bill of Rights, placing individuals at the center of how their identity is used and shared. The goal is to reduce fraud, improve transparency, and strengthen accountability by shifting to privacy-preserving, user-controlled credentials.
As federal debates continue to focus on managing data within legacy systems, states have an opportunity to lead in a fundamentally different direction, one that restores individual control over identity and personal information.