Welcome to Crypto Long & Short, our weekly institutional newsletter. This week, we explore the future of digital identity and how state-led solutions can help prevent fraud.
Tricia Gallagher, founder of Treasury Solutions Info Tech, discusses how the US has lost an estimated $5 trillion to fraud and improper payments, and how most policy responses focus on detection rather than addressing the underlying issue of identity. She argues that a state-led approach, where individuals have control over their personal data, is the key to preventing fraud and promoting innovation. The current system, where data is collected and monetized by banks, tech platforms, and governments, is inefficient and prone to misuse.
Gallagher suggests that states, as primary issuers of identity, are well-positioned to lead the next phase of digital identity infrastructure, by shifting from centralized data silos to 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. The newsletter also features headlines of the week, including developments in stablecoins, geopolitics, and decentralized finance, as well as a chart of the week on crypto Trading Card Game gacha volumes.