Nasaa to Senate: Don’t Legislate Away State Regulators’ Role in Policing Crypto
The state regulator group is urging senators to tweak certain parts of pending legislation to preserve state regulators’ role in policing scams in the digital asset space.
By Glenn Koch | February 26, 2026
The North American Securities Administrators Association has asked the Senate to rework certain points of proposed legislation around tokenized securities and ensure states’ regulatory role in the digital asset space.
Nasaa President Marni Rock Gibson on Monday sent a letter to Senators Tim Scott (R.-S.C.) and Elizabeth Warren (D.-Mass.), president and ranking member, respectively, of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, the state regulator group announced Wednesday.
Gibson is aiming to ensure that Nasaa’s views on several topics are adequately reflected in the House’s Digital Asset Market Clarity Act and the Senate’s Digital Commodities Intermediaries Act, two pieces of companion legislation before the Senate that would establish a regulatory framework for digital commodities.
Gibson suggested several changes to the current drafts of the legislation but is urging Scott to preserve the Clarity Act’s language establishing that “a tokenized financial instrument shall be treated for all regulatory purposes as the financial instrument it represents” and that a security “Issued, recorded, represented, or transferred using distributed ledger technology” remains legally classified as a security.
Gibson challenged the notion that regulating tokenized securities as securities would impede innovation, arguing instead that doing so would help deter bad actors and ensure “that critical protections governing the offer and sale of securities to investors, along with rules that are essential to a well-functioning market, remain in place regardless of the technological platform on which the security is issued and sold.”
Though Gibson said that the Clarity Act is on point with regard to regulation of tokenized securities, she also recommended several changes to that bill and the DCIA. Chief among those changes is preserving state regulators’ role as “the boots-on-the-ground partners” of the Securities and Exchange Commission and the Commodities and Futures Trading Commission.
Gibson said the proposed legislation largely gets it correct in this regard but in some ways may “create the potential for gaps and ambiguity” that may compromise state regulators’ power to punish scammers.
Gibson urged Scott and Warren to maintain “a deliberate and careful balance where state securities registration and rulemaking are constrained only as necessary to achieve a workable state-federal regulatory regime for the capital markets.” She recommended revising the proposed legislation to include “clear catch-all savings clauses confirming that neither the CLARITY Act nor the DCIA limits existing state securities and commodities anti-fraud authorities, including with respect to assets that are not ‘digital assets.'”
Gibson also recommended tweaks to certain language in the Clarity Act that she interprets as potentially weakening the Howey test for determining what constitutes an investment contract for regulatory purposes. Howey, according to Gibson, is “a powerful weapon to fight the online scam epidemic [and] other common investment frauds like pyramid schemes, ‘investment certificate offerings,’ and Ponzi schemes.”
Gibson also urged Scott to ensure that the final bill does not grant the SEC “wide-ranging exemptive authority that can be exercised by order” and that the commission offers notice-and-comment periods for all its proposed rules.
Nasaa’s proposed changes to the pending legislation drew praise from the Public Investors Advocate Bar Association on Wednesday.
Piaba President Michael Bixby underscored the importance of state regulators in comments to FA-IQ, saying “Congress would do well to carefully listen to [Gibson’s] suggestions.”
“NASAA is absolutely correct that the stakes for investor protection could not be higher,” Bixby wrote in an email. “If meaningful consumer protections including the ability to pursue redress for fraud and other misconduct are not included in the final bill, millions of Americans will be put at greater risk.”
Bixby added that state securities regulators “are far too often the only regulators fighting against fraud for victims in their states” and said preserving their authority is particularly important to combat fraud in the crypto space.