Welcome to our institutional newsletter, Crypto Long & Short. This week:

• Tricia Gallagher on how the fix for broken digital identity systems will need to be state-led and user-controlled.
• Top headlines institutions should pay attention to by Francisco Rodrigues.
• Crypto TCG gacha volumes hit all-time high as CARDS token surges 52% in Chart of the Week.

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-Alexandra Levis

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Expert Insights

Fighting fraud in the digital age: why state-led 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 issue. Fraud at this scale is not a compliance failure — it is an infrastructure failure and at its center is identity. Addressing it requires a shift away from band-aid solutions toward 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 to 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, one-time consent frameworks that enable ongoing access and reuse of financial data with limited transparency. More importantly, when consumers cannot actively direct how their data is shared and used, they are limited in their ability to access new and tailored financial services — constraining 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 used.

At its core, this model requires individuals to surrender control of their identity and personal data to participate. These systems are not only inefficient, 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 centers on control of consumer financial data. They are treated as separate issues, but in reality reflect the same structural gap.

Policymakers are responding, but largely within the constraints of the current system. Congressional efforts to update the Gramm-Leach-Bliley Act focus on consumer data control 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 — including an interagency fraud task force — have been launched.

On one side, policymakers are pursuing incremental privacy improvements. On the other, they are expanding access to sensitive government data to combat 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 simply data protection. It is how to enable trusted verification and privacy while preserving 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 critical role to play.

States have long served as the primary issuers of identity through birth records, driver’s licenses and other foundational 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 re-architecting how that trust is expressed: shifting from centralized data silos to privacy-preserving, user-controlled credentials.

Utah provides a clear example. Through legislation taking effect in May 2026, the state has introduced a Digital Identity Bill of Rights that places individuals 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 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 managing 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 finance will not be defined by speed alone, but by whether systems uphold both trust and rights.

Identity is the bridge between the two.

Headlines of the Week

By Francisco Rodrigues

This week delivered a blend of significant developments across 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, crypto entered geopolitical tensions as Iran explored collecting transit fees in cryptocurrency for oil tankers passing through the Strait of Hormuz. The Strait has since been blockaded by the U.S. navy.

Chart of the Week

Crypto TCG gacha volumes hit all-time high as CARDS token surges 52%

The crypto Trading Card Game (TCG) gacha market — where players spend crypto to open randomised digital card packs — hit a record $36 million+ in weekly volume on April 13th, 2026, continuing the uptrend post the range-bound move in February. CARDS/USD, the largest tokenised trading card index, appears to be responding, surging 52% in the last 24 hours as on-chain card collecting sentiment recovers.

Listen. Read. Watch. Engage.

Enterprise crypto infrastructure firm Fireblocks has launched an on-chain lending product, Earn, giving its institutional clients direct access to two of DeFi’s largest lending protocols, per a press release shared with The Defiant.

Via Earn, the firm’s more than 2,400 institutional clients will be able earn yield on their stablecoin holdings via Morpho and Aave, directly from the Fireblocks platform. The feature is available across all of Fireblocks’ infra solutions, including its digital asset treasury solution, in the case the corporate treasury holds stablecoins.

Existing Fireblocks customers need to apply to get early access to the feature, per the release.

Aave is the dominant lending protocol in DeFi, with roughly $26.3 billion in total value locked (TVL) and around $18 billion in active loans. Aave commands about 50% of the DeFi lending market TVL, per DefiLlama data. Morpho is DeFi’s second-largest lending protocol by TVL, with approximately $7.6 billion in TVL, according to DefiLlama.

Fireblocks Earn will launch with a curated vault managed by Sentora, provided by Morpho. Both integrations operate within Fireblocks’ existing approval workflows, policy controls, and transaction signing infrastructure, the press release notes.

The product targets idle stablecoin balances sitting “between deployment cycles, settlement windows, and operational holds” across Fireblocks’ clients. The company says stablecoin transfer volume on its network totaled $6 trillion in 2025, a 300% increase year-over-year.

“For the first time, institutions can put those balances to work through onchain lending strategies curated by established institutional names, inside the same platform, under the same controls they already run,” said Fireblocks co-founder and CEO Michael Shaulov.

The integration deepens a long-running relationship between Fireblocks and Aave, dating back to Aave Arc, a permissioned version of the DeFi protocol targetting institutions, launched in 2022. As The Defiant reported at the time, at launch, Fireblocks served as sole approved whitelister for Arc, in part tasked with compliantly onboarding institutional players to the platform.

Morpho, meanwhile, has been expanding institutional partnerships, with Apollo Global Management committing to acquiring up to 9% of its token supply in a February agreement. Also recently, the Ethereum Foundation deployed more deposits to Morpho vaults, totaling nearly $19 million as of last month.

This article was written with the assistance of AI workflows. All our stories are curated, edited and fact-checked by a human.

• Fireblocks integrates Aave into its Earn feature, enabling institutional clients to earn yield on stablecoins.
• Aave founder Stani Kulechov highlights Aave’s resilience amid rising DeFi adoption.
• AAVE price analysis shows bullish positioning, with potential rally as adoption continues.

Aave’s role in decentralized finance has received a major boost as Fireblocks unveils a new platform set to bring stablecoin yield to institutional clients.

The enterprise platform’s new Earn feature now embeds Aave, enabling seamless yield generation on stablecoins for its vast institutional network.

The AAVE token is up more than 5% in the past 24 hours, with bulls testing $105 amid broader gains across the cryptocurrency market.

Why Aave and Fireblocks integration matters

As noted, the enterprise platform Fireblocks has integrated Aave into its new Earn feature.

The platform allows the over 2,400 institutions on Fireblocks to tap into DeFi via Aave-powered yield on their stablecoin balances.

Earn thus allows Fireblocks customers to deploy their idle capital to work, and its traction could add to Aave’s adoption.

The digital asset operations tied to the integration will bolster AAVE.

“Aave has demonstrated resilience, transparency, and security across multiple market cycles, driving increased institutional participation,” said Stani Kulechov, founder of Aave Labs.

“As institutions enter the space, access to deep, reliable liquidity becomes essential. With the Fireblocks Earn integration, institutions can now access Aave’s stablecoin liquidity directly within the familiar Fireblocks platform.”

This move builds on Fireblocks’ handling of over $10 trillion in digital asset transactions and $6 trillion in stablecoin volume last year, representing a 300% year-over-year surge.

Aave’s DeFi liquidity markets are available on Ethereum, Base, Arbitrum, and Optimism.

Aave is now available as the primary yield source for Fireblocks Earn, accessible to all Fireblocks users. https://t.co/7FQtILJttJ

— Stani (@StaniKulechov) April 15, 2026

AAVE price analysis

This integration bolsters Aave’s position as DeFi’s leading lending protocol.

Institutional capital via Fireblocks could drive sustained AAVE appreciation, enhancing liquidity depth and protocol utility.

AAVE’s price surged following the Fireblocks announcement on April 15, 2026, reflecting market enthusiasm for institutional inflows.

While the altcoin mirrored the performance of top coins, the news looks to have emboldened buyers.

The token traded around $105 after bearish pressure reemerged near $110, but the dip in daily volume suggests sellers do not hold the sway.

On the other hand, the technical picture shows bullish signals across key indicators.

The Relative Strength Index (RSI) hovers near 55 on the daily chart. Exiting neutral territory indicates a potential bullish momentum before overbought risks kick in above 70.

The MACD also reveals a histogram expansion amid a bullish crossover pattern.

On the upside, 50-day and 100-day exponential moving averages (EMAs) offer the immediate resistance areas at $106 and $124. A short-term bullish structure would see AAVE surge to $164.

However, downside risks include failure to hold $100, which could allow bears to target $89 and then $80 as primary support levels.

Crypto exchanges have become the primary venues where millions of people and businesses store and transfer digital money. According to industry data, the crypto market is currently seeing roughly $190–$192 billion in 24-hour trading volume. As exchanges expand into multi-asset venues, the security mechanism evolves beyond wallets into identity, permissions, pricing and settlement. Yet, despite growing pressure from regulators, their security is still failing.

In 2025, more than $3 billion in crypto assets were stolen, according to industry estimates. Moreover, several single incidents caused losses of over $1 billion each. Were these small or underfunded platforms? No.

The largest hacks happened at major global exchanges with ample capital and technology. So, a lack of resources allocated for protection wasn’t the issue — security, still treated as marketing, was.

Much of the industry keeps treating security as a performance rather than an operating discipline. Exchanges invest in what appears convincing on the surface: dashboards, reserve snapshots, protection funds, public statements. It looks reassuring, but it doesn’t prove how risk is managed day to day.

That’s why, unless security is designed to be enforced, not shown off, even the biggest platforms will stay fragile. And when stress hits, that fragility spills over to users immediately.

Performative Security is Dangerous

In fact, what’s happening is what I call “security theater.” It’s when an exchange focuses on looking safe, but not actually being safe. So the focus shifts to optics, such as headlines and polished statements, while the real governance remains weak.

I’ve seen how such a mindset takes hold. When a business is growing, it has to move fast and keep everything smooth for users. In such conditions, security controls are a friction. They slow down decisions by adding extra steps and triggering uncomfortable questions like “Who can approve this transfer?” And “what happens if the wrong person gets access?” That’s why many platforms prefer confidence on the surface over discipline inside.

And the big problem is that this false confidence doesn’t survive stress. In July 2024, India’s WazirX suffered a roughly $235 million hot valuable wallet breach and suspended withdrawals. In my view, that’s a useful reminder of how quickly “everything looks fine” can turn into users losing access to their funds.

And that’s the point. Security isn’t a page, a logo or a fund. It’s the daily rules that control how money moves, who has access and how cases are handled when something goes wrong.

What exchanges must prove to earn real trust

Genuine exchange security is a system that endures stress, and you can test that. From my experience, it has three core traits:

• it proves full backing of customer balances,
• it controls how money moves,
• and it responds fast in a crisis.

Proof-of-reserves is a start toward demonstrating the system can withstand stress. Simply put, it’s evidence that certain assets exist. Still, it says little about what the exchange owes you, what rules apply to your money if the exchange has troubles or whether the numbers are true when many users withdraw at once. That’s why transparency should be two-sided.

It should clearly show assets and liabilities, with an independent check. And the “proof” should be verifiable, for example, through cryptographic methods that allow users to confirm inclusion without exposing balances.

Then comes the part most “security pages” avoid — strict rules inside the company. No single person should be able to move customer funds, unusual activity should trigger reviews, and large transfers must require approval from at least two people. With these controls in place, one compromised account can’t cause a chain reaction across the platform.

Since exchanges are becoming multi-asset platforms, those rules need one more goal: keeping a permission mistake or pricing anomaly from spilling into cross-asset liquidations.

Quick incident response is the final test of real security. A serious exchange knows exactly what happens in the first hour, isolates the breach, pauses critical flows and communicates clearly. Delays and silence don’t buy time; they simply multiply damage.

Of course, these measures don’t cover every possible risk. Even so, they form the backbone of true exchange durability — the kind that prevents routine incidents from turning into systemic failures.

By 2026, ‘trust us’ costs too much

If exchanges want to keep their customers and attract serious, institutional capital, they have to stop acting like performers in a safety show. Reassuring words and polished pages may calm people in quiet moments, but they fail when a big crisis hits.

Big investors have already started treating security as basic counterparty risk. They want evidence of controls, separation of duties, independent assurance, and a response plan that works under pressure.

So, in 2026, a simple “trust us” on a homepage won’t be enough. Can one mistake drain the platform or does the system stop it? Can you prove that with enforced limits and approvals, instead of explanations after the fact? These are questions that everyday users and large investors alike are starting to ask.

After all, security is about building systems that mitigate damage, slow down bad decisions and hold up under stress. Exchanges that make that shift will keep trust. Those who don’t will keep learning the same lesson the hard way.

Bitcoin (BTC) has a target market that is “probably a lot bigger” than gold’s $30 trillion market cap, says a crypto industry executive.

Key points:

• Bitcoin should continue to outperform during geopolitical crises, says Bitwise’s Matt Hougan.

• Bitcoin’s “addressable market” could surpass gold’s near $40 trillion market cap.

• A trader eyes a return to $90,000 for Bitcoin after a historic drawdown against gold.

Bitcoin “probably” beats gold target market

In an X article on Tuesday, Matt Hougan, chief investment officer of crypto asset manager Bitwise, saw geopolitical conflict fueling BTC price gains in future.

“Bitcoin has performed well since the start of the Iran conflict,” he noted. 

“Since U.S. and Israeli airstrikes began on February 28, bitcoin is up 12% while the S&P 500 is down 1% and gold has fallen 10%.”

Bitcoin rallied to $76,000 this week, hitting two-month highs on a combination of US-Iran war relief and cooler US inflation numbers, per data from TradingView.

“This has caught many off guard. Bitcoin is a risk asset, and many assumed it would fall during a risk-off geopolitical shock,” Hougan commented.

“Pundits have grasped for explanations: Some have argued that geopolitics is irrelevant for bitcoin, while others have pointed out that war often leads to money printing, which tends to boost bitcoin in the long term. Both arguments are wrong.”

For Hougan, the nature of recent conflicts — notably Russia being shut out from the SWIFT network in 2022 — has bolstered Bitcoin’s status as an “apolitical alternative.”

“I mused at the time that the weaponization of SWIFT might one day open up space for bitcoin: If countries grew reluctant to deal in dollars, it stood to reason that they might prefer an apolitical alternative at some point,” he continued.

Now, with Iran under both financial sanctions and an oil blockade, collecting crypto tolls for transit through the Strait of Hormuz, that “weaponization” trend is strengthening.

“This framing tells you two important things about bitcoin’s future,” the post summarized. 

“First, it tells you that bitcoin is likely to rise during future geopolitical conflicts -— particularly if they occur in regions trapped between the US and Chinese systems.  And second, it tells you that bitcoin’s total addressable market is probably a lot bigger than the $38 trillion gold market alone.”

Bitcoin vs. gold sparks $90,000 BTC price target

In gold terms, Bitcoin is currently recovering from a trip to its lowest levels since mid-2023.

Related: Oil price surges 8% on Iran tensions: Five things to know in Bitcoin this week

The rebound has been slow, even as Hougan predicts the end of the current “crypto winter.” For some, however, the writing is on the wall when it comes to a meaningful bullish trend change.

In an X post of his own, crypto trader Michaël van de Poppe predicted that “mean reversion” for Bitcoin was just a matter of time.

“The recent correction of $BTC vs. Gold is the heaviest in the history of Bitcoin,” he noted. 

“Comparing this to historical events, the average return after 12 months was 350-450% from this point. That means, from here an increase from $60,000 to $275,000. In 3 months time, it’s very likely that we’ll be trading at $87,500-90,000.”

Comparing behavior after other drawdowns, Van de Poppe said that the “moral of the story” was to “buy the dip” on BTC.

“This is the general moment every cycle that you’d want to get allocated into an asset,” he argued.