The North American Securities Administrators Association, Inc (NASAA) has submitted a letter to the top leaders in each chamber of Congress saying the organization believes the federal government should maintain a technology-neutral approach to market regulation.

The trade group represents state and provincial securities regulators in the US, Canada and Mexico, and its letter said that such a neutral approach would best foster regulatory predictability and stability for regulators and entities, plus technologists and innovators.

The note specifically mentions distributed ledger technology (DLT), which NASAA says has been the subject of various bills that seek to create new laws for transactions using DLTs, which promoters generally have described as “virtual currencies” and “payment stablecoins.”

Protecting investors

NASAA cites the many schemes tied to various new and evolving uses of DLTs that state regulators have been pursuing, with such scams sharing many of the characteristics of traditional affinity scams, particularly pig butchering ones that build trust over time with a victim before scamming them and that often target the elderly.

NASAA says that “state securities regulators have been able to hold more bad actors accountable precisely because state legislators did not tie their authorities to selected technologies and uses thereof.”

The group notes that state regulators have long relied on the term “investment contract” as an important tool supporting their investor protection efforts.

“The term has served as a necessary touchstone in market regulation for the myriads of evolving investment schemes, which often are built around relationships, and upon trust and leverage of the latest technologies. Keeping technology out of the definition of a security and in particular the use of “investment contract” has had proven benefits for Americans that should not be ignored,” the group says.

Proposed approach

NASAA offers an approach by Congress that would have any legislative text that includes a reference to specific technology (such as DLT) to, at a minimum, include this language: “State securities commissions (or any agency or office performing like functions) are authorized to investigate and bring enforcement actions for any violation of federal law, regulation, or rule established pursuant to [insert the title of the new law].”