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State Regulators Raise Alarm Over Crypto Legislation Impacting Fraud Prosecution

State regulators across the United States are expressing growing concerns regarding a proposed crypto market structure bill, fearing it could undermine anti-fraud protections.

Officials from various states, including Alabama and Montana, have cautioned that the legislation may limit their ability to enforce laws against digital asset fraudsters.

Amanda Senn from the Alabama Securities Commission stated that the current draft lacks provisions granting state regulators authority over crypto companies.

This lack of oversight coincides with a noticeable decrease in federal enforcement of crypto regulations, despite their crucial role in protecting investors.

Data shows that the Securities and Exchange Commission (SEC) has initiated significantly fewer crypto-related enforcement actions this year compared to previous years.

Montana State Auditor James Brown warned that alterations to the definition of investment contracts could allow fraudsters to evade prosecution.

State regulators are lobbying for amendments to the bill to ensure it supports their ability to combat fraud effectively.

The North American Securities Administrators Association (NASAA) emphasizes the importance of maintaining state anti-fraud enforcement authorities.

They have proposed rejecting changes to the investment contract test and enacting the Support Anti-Fraud Enforcement (SAFE) Act.

While some industry experts believe the bill won't hinder prosecutions, concerns remain over the efficacy of state anti-fraud measures in the evolving digital asset landscape.