(1) The lack of an easy, affordable, and reliable 
way for organizations, businesses, and government 
agencies to identify whether an individual is who 
they claim to be online creates an attack vector that 
leads to millions of Americans being victimized by 
China and North Korea, and other hostile nation- 
states, as well as organized crime gangs, all of whom 
steal 
and 
compromise 
identities 
to 
commit 
cybercrime and fraud. 
(2) Incidents of identity theft and identity 
fraud continue to rise in the United States, where 
more than 353 million people were impacted by data 
breaches in 2023. 
(3) The Government Accountability Office 
(GAO) estimated that the Federal Government could 
lose between $233 billion and $521 billion annually 
to fraud; GAO estimated that the amount of fraud 
in unemployment insurance programs during the 
COVID-19 pandemic was likely between $100 billion 
and $135 billion and found that the majority of this 
fraud occurred because compromises of identity. 
(4) The Financial Crimes Enforcement Net-
work of the Department of the Treasury reported 
that $212 billion worth of suspicious financial trans-
actions in 2021 was tied to some form of identity 
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compromise; in 2024, they revealed that this number 
had exploded in 2023, covering over 70 percent of 
all Suspicious Activity Reports (SARs) filed by 
banks, tied to $394 billion of transactions. 
(5) In 2024, the Department of the Treasury 
report on ‘‘Managing Artificial Intelligence-Specific 
Cybersecurity Risks in the Financial Services Sec-
tor’’ flagged the threat of new ‘‘deepfake’’ attacks 
powered by artificial intelligence and noted ‘‘The vol-
ume of these types of exploitations or cyber-enabled 
attacks is likely to rise as technological developments 
like Generative AI reduce the cost, complexity, and 
time required to leverage gaps in our digital infra-
structure.’’. 
(6) The inadequacy of current digital identity 
solutions degrades security and privacy for all Amer-
icans, and as ‘‘deepfake’’ attacks become more prev-
alent, next generation solutions are needed that can 
protect consumers, businesses, and government 
agencies from identity-related cybercrime. 
(7) 
Government 
entities, 
as 
authoritative 
issuers of identity in the United States, are uniquely 
positioned to deliver critical components that ad-
dress deficiencies in our identity infrastructure and 
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augment private sector identity and authentication 
solutions. 
(8) State governments are particularly well 
suited to play a role in enhancing digital identity so-
lutions used by both the public and private sectors, 
given the role of State governments as the issuers of 
driver’s licenses and other identity documents com-
monly used today. 
(9) The National Institute of Standards and 
Technology (NIST) was directed in the CHIPS and 
Science Act of 2022 to launch new work to develop 
a framework of common definitions and voluntary 
guidance for digital identity management systems, 
including identity and attribute validation services 
provided by Federal, State, and local governments, 
and work is underway at NIST to create this guid-
ance. However, State and local agencies lack re-
sources to implement this new guidance, and if this 
does not change, it will take decades to harden defi-
ciencies in identity infrastructure. 
(10) It should be the policy of the Government 
to use the authorities and capabilities of the Govern-
ment to enhance the security, reliability, privacy, 
and convenience of digital identity solutions that 
support and protect transactions between individ-
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uals, government entities, and businesses, and that 
enable Americans to prove who they are online. 
SEC. 
3. 
IDENTITY 
FRAUD 
PREVENTION 
INNOVATION 
GRANTS. 
(a) IN GENERAL.—The Secretary of the Treasury 
shall, not later than 1 year after the date of the enactment 
of this section, establish a grant program to provide iden-
tity fraud prevention innovation grants to States. 
(b) USE OF AMOUNTS.— 
(1) IN
GENERAL.—States shall use amounts 
provided under this section to— 
(A) develop digital versions of driver’s li-
censes and other identity credentials that com-
ply with the guidelines for identity and at-
tribute validation services developed by the Na-
tional Institute of Standards and Technology 
under section 504 of the Cybersecurity En-
hancement Act of 2014; 
(B) protect the privacy and security of in-
dividuals, 
including 
guarding 
against 
‘‘deepfake’’ attacks powered by artificial intel-
ligence; 
(C) catalyze the development, deployment, 
and use of more resilient, interoperable solu-
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tions Americans can use to protect and assert 
their identity online; 
(D) reduce identity theft and fraud by re-
placing legacy identity systems that are highly 
vulnerable to attack from organized criminals 
and hostile nation-states with more robust solu-
tions that can defeat these attacks; 
(E) ensure the integrity of Government 
benefit programs paid through the Department 
of the Treasury; 
(F) protect the United States financial sys-
tem from abuse by illicit actors; and 
(G) enable more trusted transactions on-
line. 
(2) REQUIREMENT.—Not less than 10 percent 
of any amounts provided to a State under this sec-
tion shall be used by such State to provide services 
designed to assist individuals with obtaining any 
identity credentials or identity verification services 
that are required to obtain a digital driver’s license 
or other digital identity credential offered by such 
State physical. 
(c) LIMITATIONS.—A State may not use any amounts 
provided under this section to— 
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(1) require a person to obtain or use a digital 
driver’s license or digital identity credential; 
(2) support any by such State to eliminate the 
issuance of physical driver’s licenses and physical 
identity credentials; or 
(3) support the issuance of drivers licenses or 
identity credentials to unauthorized immigrants. 
(d) RULE OF CONSTRUCTION.—Nothing in this sec-
tion may be construed to require any State to develop or 
issue digital versions of driver’s licenses or other identity 
credentials. 
(e) DEFINITIONS.—In this section: 
(1) SECRETARY.—The term ‘‘Secretary’’ means 
the Secretary of the Treasury. 
(2) IDENTITY CREDENTIAL.—The term ‘‘iden-
tity credential’’ means a document or other evidence 
of the identity of an individual issued by a State 
that conveys the identity of the individual, including 
a driver’s license, State-issued identification card, or 
birth certificate. 
(3) UNAUTHORIZED
IMMIGRANT.—The term 
‘‘unauthorized immigrant’’ means a person who is 
not— 
(A) is not citizen or national of the United 
States; 
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(B) is not an alien lawfully admitted for 
permanent or temporary residence in the 
United States; 
(C) does not have conditional permanent 
resident status in the United States; 
(D) does not have an approved application 
for asylum in the United States; and 
(E) did not enter into the United States
in refugee status. 
Æ 
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