Welcome to our institutional newsletter, Crypto Long & Short. This week:
- Tricia Gallagher on how fixing broken digital identity systems must be state-led and user-controlled.
- Top headlines institutions should be aware of by Francisco Rodrigues.
- Crypto TCG gacha volume hits record high as CARDS token surges 52% in Chart of the Week.
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-Alexandra Levis
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Expert insight
Fighting fraud in the digital age: why state-controlled identity is the future
By Tricia Gallagher, Founder and Principal, Treasury Solutions Info Tech (TSIT)
The United States has lost an estimated $5 trillion to fraud and improper payments across government programs.
That number should stop us in our tracks.
Yet most policy responses still focus on detection, recovery and enforcement. They miss the underlying problem. Fraud on this scale is not a compliance failure – it is an infrastructure failure and at the center is identity. Tackling it requires a shift away from band-aid solutions to a re-architecture of our digital identity framework.
There is a growing movement around the idea that identity – and control over access to personal data – belongs to the individual, not banks, technology platforms or even the government. Even within the financial system, where data use is more tightly regulated, individuals often lack meaningful visibility or control. Data sharing works through broad, one-time consent frameworks that enable ongoing access and reuse of financial data with limited transparency. More importantly, when consumers cannot actively control how their data is shared and used, they are limited in their ability to access new and tailored financial services – limiting innovation, reducing competition and slowing economic growth.
This dynamic is even more pronounced in the technology sector, where personal data is routinely collected, aggregated and monetized at scale. Across both domains, individuals have limited awareness of who has access to their data and how it is being used.
At its core, this model requires individuals to relinquish control over their identity and personal data in order to participate. These systems are not only ineffective, they expand the surface area for abuse and security breaches. More fundamentally, they erode individual agency and undermine the very notion of inalienable rights in the digital age.
Two major policy debates in Washington reflect this tension: one focuses on reducing fraud and improper payments; the other centers on control of consumer financial data. They are treated as separate issues, but in reality reflect the same structural divide.
Politicians react, but largely within the limitations of the current system. Congressional efforts to update the Gramm-Leach-Bliley Act focus on consumer data control through opt-in and opt-out schemes. At the same time, the Trump administration has increased fraud prevention through expanded oversight and increased data sharing across agencies. Since January 2025, more than a dozen federal initiatives — including an interagency fraud task force — have been launched.
On the one hand, policymakers are pursuing incremental improvements to privacy. On the other hand, they are expanding access to sensitive government data to fight fraud. The result is continued reliance on centralized data pools combined with limited individual control over how personally identifiable information (PII) is accessed and used. These architectures increase exposure, create attractive targets for bad actors, and remain difficult to secure at scale.
The core challenge is not just data protection. It’s how to enable trusted verification and privacy while maintaining individual control over access to personal data. Without that control, individuals are required to relinquish how their data is accessed and used, undermining a core inalienable right in the digital economy. This is where states have a crucial role to play.
States have long served as the primary issuers of identity through birth certificates, driver’s licenses and other basic credentials. This positions them to lead the next phase of digital identity infrastructure. The future of digital identity will require states to become anchors of trust—not by expanding data collection, but by restructuring how that trust is expressed: shifting from centralized data silos to privacy-preserving, user-controlled credentials.
Utah provides a clear example. Through legislation coming into effect in May 2026, the state has introduced a Digital Identity Bill of Rights that puts individuals at the center of how their identity is used and shared. It sets out clear principles to enable user control, data minimization, limited monitoring and verification based only on what is necessary. At its core is a simple reality: Trust in financial systems requires authoritative identity. Access to public funds and services depends on verified eligibility, and states already fulfill this role.
The goal is not to remove the state, but to modernize how trust is expressed. By shifting to privacy-preserving, user-controlled credentials, states can reduce fraud, improve transparency, and strengthen accountability.
As federal debates continue to focus on the governance of data within legacy systems, states have an opportunity to lead in a fundamentally different direction—one that reduces reliance on centralized data and restores individual control over identity and personal information. The future of digital economy will not be defined by speed alone, but by whether the systems maintain both trust and rights.
Identity is the bridge between the two.
This week’s headlines
By Francisco Rodrigues
This week delivered a mix of significant developments across geopolitics, global regulation and decentralized finance.
Stablecoins were a key focus globally, with the Federal Deposit Insurance Corp. formally proposed its approach to US federal regulations, and a group led by HSBC and Standard Chartered received Hong Kong’s first stablecoin licenses.
Meanwhile, crypto entered geopolitical tensions as Iran explored charging transit fees in cryptocurrency for oil tankers passing through the Strait of Hormuz. The strait has since been blocked by the US Navy.
Chart of the week
Crypto TCG gacha volume hits record high as CARDS token surges 52%
The crypto trading card game (TCG) gacha market – where players use crypto to open randomized digital card packs – hit a record $36 million in weekly volume on April 13, 2026, continuing the upward trend following the range-bound move in February. CARDS/USD, the largest tokenized trading card index, appears to be responding, rising 52% in the last 24 hours as on-chain card collecting sentiment recovers.
