Welcome to Crypto Long & Short, our institutional newsletter. This week, we explore the need for a state-led approach to digital identity. The US 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. A growing movement emphasizes the importance of individual control over personal data, with states well-positioned to lead the next phase of digital identity infrastructure.
By shifting to privacy-preserving, user-controlled credentials, states can reduce fraud, improve transparency, and strengthen accountability. Utah's Digital Identity Bill of Rights is a notable example, placing individuals at the center of how their identity is used and shared. The future of digital finance will depend on whether systems uphold both trust and rights, with identity serving as the bridge between the two.