What 2026 Market Conditions Say About The Future of Trust & Identity

For a while, “identity” lived in the background of our collective consciousness. A login screen, a “validate your email” field, a checkbox. Verification was a step that organizations implemented, and users accepted.

That era is done.

Over the past year, Identity has emerged as one of the most important and complex security challenges of our time. As a result, identity has shown up where budgets are biggest and stakes are highest: Venture capital, private equity, M&A, federal procurement, and global assemblies like the 2026 World Economic Forum (WEF) Annual Meeting. 

These investments are not experiments. They’re long-term bets that affect millions of people and set expectations for how organizations should think about identity and fraud prevention — without punishing legitimate users.

The numbers matter here, but the bigger signal is what it represents. Identity is now being treated as core infrastructure, and the market is responding accordingly. You can see it across three distinct areas, accelerating at the same time: government contracts, private investment, and state/federal policies.

Governments are awarding multi-billion dollar contracts

Governments are rethinking their expectations around identity assurance, online safety, and privacy. Fraud (powered by AI) is not theoretical anymore, and neither are the downstream consequences when identity systems fail. That pressure is pushing identity programs beyond basic ID & biometric checks, toward stronger more defensible models that can keep up with AI-driven impersonation and synthetic identity tactics.

A billion-dollar identity agreement with the IRS

In January 2026, the IRS awarded ID.me a blanket purchase agreement valued at up to $1 billion for identity verification and authentication services.

The IRS award is one of the most visible examples, but it’s not happening in a vacuum. Government agencies are investing in identity programs that need to serve massive user populations, defend against modern fraud, and maintain access for legitimate people who still need help.

This is what “identity at scale” looks like now: not a point solution, but a robust platform, network, and ecosystem of verification, authentication, and ongoing risk management solutions.

Medicare.gov is adding new identity options at US-national scale

The Centers for Medicare & Medicaid Services (CMS) are also making a major identity update to address access, security, and user experience. Starting in early 2026, ID.me will be available as an identity verification and sign-in option for Medicare.gov.

And it’s not the only provider in the mix. CLEAR also announced a CMS contract focused on enabling digital identities for Medicare.gov.

If you want a new perspective on where the identity market is going, it’s always a good idea to watch what happens when user-scale is massive, the fraud incentives are real, and the tolerance for friction is low. Medicare.gov will be a great pressure test for modern identity frameworks.

Login.gov is modernizing its identity proofing and vendor ecosystem

Login.gov is one of the most consequential identity platforms, primarily serving access to the U.S. federal services. Over the past year, we’ve seen multiple signals that Login.gov is evolving both its capability and supplier landscape:

• GSA announced passport-based identity verification for Login.gov, enabled through interagency partnerships and authoritative records.
• IDEMIA announced a 10-year BPA from GSA tied to next-generation identity proofing for Login.gov.
• Diamond Capture Associates and subcontractor Incode announced a contract award to support Login.gov’s next-generation identity proofing.

The pattern we’re seeing is not that “one” vendor wins. It’s that identity-based solutions are expanding, and organizations are modernizing to meet sophisticated threats — relying on multiple vendors to provide specialized capabilities.

Investors poured nearly $2 billion into identity solutions

If you feel like every other cybersecurity news headline is suddenly about identity, you’re not wrong. The market is moving fast, and the money is following.

Over the past year, investors have poured capital into identity companies tackling everything from identity governance and fraud prevention to AI agent identities and new models for verifying users online. Investors aren’t doing this because identity is trendy, they’re doing it because the problem is getting harder and more lucrative to solve.

Here are 10 of the largest recent raises in the identity space:

• Saviynt – $700M (Identity governance & administration)
• Cyera – $400M (AI-powered data & identity security)
• Veza – $108M (Identity search & posture management)
• Adaptive Security – $81M (Adaptive authentication & real-time identity)
• 1Kosmos – $57M (Biometric authentication & fraud prevention)
• k-ID – $50.3M (Youth and age-based identity & safety)
• Push Security – $49M (Browser-based SaaS identity security)
• Aembit – $43M (Non-human identity (NHI) & workload IAM)
• Orchid Security – $36M (Identity hygiene & governance)
• Descope – $35M (Identity for developers and AI-native apps)

Honorable mentions

Looking beyond the biggest rounds listed above, there’s a growing wave of companies raising money to address emerging issues related to identity — like identity response, identity privacy, API identity security, and AI-agent governance. It’s another sign that identity is no longer a single easy-to-define category. It’s becoming an expanding ecosystem that includes:

• Mitiga – SaaS and cloud-based identity response
• Verisoul – digital identity and bot prevention
• Prime Security – identity security for software delivery
• Authologic – identity verification orchestration
• Continuum ID – reusable digital identity
• Proof - identity authorization infrastructure, backed in part by strategic investment from Visa

AI powered fraud and scams are driving policy decisions

Identity news isn’t just about contracts and investments, it’s also about the operational reality of fraud and the policy responses that follow. The landscape of identity verification has shifted rapidly, moving from traditional document checks to AI-governed frameworks and digital wallets. In 2025 and 2026, the focus has pivoted toward age-gating in the U.S. and wallet-first identification in the EU.

In the US, identity requirements are being shaped by a mix of federal standards and state/local laws.

In 2025, the Social Security Administration announced in-person identity checks for certain cases, tied to their efforts to curb direct deposit fraud. Whether you agree with an in-person approach or not, the signal is important: when fraud rises, policies shift from convenience-first to assurance-first. 

REAL ID is now fully in effect for domestic air travel, NIST’s updated digital identity guidelines are raising the bar for identity proofing, and a growing wave of state laws are pushing age verification requirements for adult content and social platforms. At the same time, biometric privacy rules like Illinois’ BIPA and similar legislation in other states are forcing companies to think harder about consent and data handling. And national associations like the American Association of Motor Vehicle Administrators (AAMVA) signal early momentum toward mobile driver’s licenses.

In the EU, the direction is more unified and more digital-wallet driven. eIDAS 2.0 requires every member state to provide a European Digital Identity Wallet by late 2026, enabling citizens to share verified attributes across borders without repeating manual checks. That wallet-first approach is reinforced by the EU AI Act’s limits on biometric identification and classification, GDPR’s stricter guidance on data minimization in ID checks, and anti money-laundering (AML) reforms that increase demand for high-assurance digital identity in high risk transactions. The bottom line: while the U.S. is tightening identity through fragmented identity, age-gating, and state-level rules, the EU is building a government-backed wallet model designed to make identity reusable across services.

What all of this identity & security activity means

If you’re building or operating a digital service, the goalpost for trust has shifted because the frequency and sophistication of fraud and impersonation attacks has also increased dramatically.

Standards are tightening, and new laws are reshaping how organizations verify users, handle biometric data, and prove identity online.

Users, customers, and citizens are being trained by governments, banks, and healthcare providers to expect identity checks at critical moments. At the same time, users have less patience for clunky verification solutions, unnecessary repetition, and slow or manual reviews.

The real challenge isn’t simply adding identity verification at different inflection points. It’s building trust and reliability that works across the moments that matter most.

That is where the market is heading, and the news is just catching up.

Why you need Proof

Proof helps organizations verify identities and establish trust throughout any workflow, authorization, or customer lifecycle. Users can also save their identities to the Authorization Network, creating a record of trust that’s reinforced over time, and lets them expedite future transactions. Fraudsters, deepfakes, and synthetic identities are caught and prevented quickly, and legitimate users enjoy a streamlined experience.

See how Proof addresses the biggest challenges in Identity and digital transactions.