Welcome to our institutional newsletter, Crypto Long & Short. This week:
- Tricia Gallagher on how the solution to broken digital identity systems will need to be state-led and user-controlled.
- The main headlines that institutions should pay attention to by Francisco Rodrigues.
- Crypto TCG gacha volumes hit an all-time high as the CARDS token surges 52% on the week’s chart.
Thanks for joining us!
-Alexandra Levis
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Expert Perspectives
Fighting fraud in the digital age: why state-led identity is the future
By Tricia Gallagher, Founder and Director of Treasury Solutions Info Tech (TSIT)
The United States has lost approximately $5 trillion to fraud and improper payments in government programs.
That number should stop us in our tracks.
However, most policy responses still focus on detection, recovery and enforcement. They overlook the underlying problem. Fraud on this scale is not a compliance failure: it is an infrastructure failure, and at its heart is identity. Addressing this requires moving away from band-aid solutions and embracing a restructuring 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 operates through broad and unique consent frameworks that enable continuous access and reuse of financial data with limited transparency. More importantly, when consumers cannot actively control how their data is shared and used, their ability to access new and personalized financial services is limited, 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. In both areas, people have limited knowledge of who has access to their data and how it is used.
In essence, this model requires people to give up control of their identity and personal data to participate. These systems are not only inefficient, but they expand the surface area for misuse 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 focuses on monitoring consumers’ financial data. They are treated as separate issues, but in reality they reflect the same structural gap.
Authorities are responding, but largely within the limitations of the current system. Congressional efforts to update the Gramm-Leach-Bliley Act focus on controlling consumer data through opt-in and opt-out regimes. At the same time, the Trump Administration has elevated fraud prevention through expanded oversight and increased data sharing across agencies. Since January 2025, more than a dozen federal initiatives have been launched, including an interagency anti-fraud task force.
On the one hand, policymakers seek incremental improvements in privacy. On the other hand, they are expanding access to confidential government data to combat fraud. The result is a 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 main challenge is not simply data protection. It’s about how to enable trusted verification and privacy while preserving individual control over access to personal data. Without that control, people must give up how their data is accessed and used, undermining a fundamental and inalienable right in the digital economy. This is where States have a fundamental role to play.
States have long been the primary issuers of identity through birth records, driver’s licenses, and other critical credentials. This positions them to lead the next phase of digital identity infrastructure. The future of digital identity will require states to become the anchor of trust, not by expanding data collection, but by restructuring how that trust is expressed: moving from centralized data silos to user-controlled, privacy-preserving credentials.
Utah provides a clear example. Through legislation set to take effect in May 2026, the state has introduced a Digital Identity Bill of Rights that puts people at the center of how their identity is used and shared. It establishes clear principles to enable user control, data minimization, restricted surveillance and verification based only on what is necessary. At its core, there is a simple reality: trust in financial systems requires an authoritative identity. Access to public funds and services depends on verified eligibility, and states already play this role.
The goal is not to eliminate the State, but to modernize the way trust is expressed. By shifting to user-controlled, privacy-preserving credentials, states can reduce fraud, improve transparency, and strengthen accountability.
As federal debates continue to focus on data management 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 finance will not be defined by speed alone, but by whether systems respect both trust and rights.
Identity is the bridge between the two.
Headlines of the week
By francisco rodrigues
This week saw a combination of significant developments in geopolitics, global regulation, and decentralized finance.
Stablecoins were a key focus globally, with the Federal Deposit Insurance Corp. formally proposing its approach to U.S. federal rules and a group led by HSBC and Standard Chartered receiving Hong Kong’s first stablecoin licenses.
Meanwhile, cryptocurrencies came into geopolitical tensions as Iran explored the possibility of charging transit fees in cryptocurrencies 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 volumes hit all-time high as CARDS token surges 52%
The cryptocurrency trading card game (TCG) gacha market, where players spend cryptocurrency to open random digital card packs, reached a record weekly volume of over $36 million on April 13, 2026, continuing the bullish trend following the range-limited move in February. CARDS/USD, the largest tokenized trading card index, appears to be responding, rising 52% over the past 24 hours as on-chain card collecting sentiment recovers.
