The debate surrounding digital asset regulation in the United States is often framed as a question of innovation versus restriction. Yet the letter submitted by the North American Securities Administration Association (NASAA) on January 26, 2026, reveals a more fundamental concern.
At stake is not merely how digital commodities are regulated, but who retains the legal authority to protect investors when misconduct occurs.
Digital Commodity Intermediaries Act
NASAA’s intervention focuses on the Digital Commodity Intermediaries Act (DCIA), a legislative proposal intended to establish a federal framework for intermediaries operating in digital commodity markets.
While the stated objective of the Act is regulatory clarity, NASAA’s analysis argues that the bill, as currently drafted, risks producing the opposite effect: legal uncertainty combined with weakened enforcement.
Rather than opposing federal oversight of digital commodities, NASAA’s letter reflects a structural critique. It warns that the DCIA may unintentionally dismantle a long-standing system of layered investor protection by concentrating authority in a single federal agency while failing to explicitly preserve the role of state regulators.
State regulators as first responders
NASAA’s position begins from an institutional reality. State securities and commodities regulators are often the earliest authorities to detect fraud, especially schemes aimed at retail investors. Their proximity to local markets enables them to respond quickly to emerging misconduct, long before national enforcement patterns become visible.
The letter emphasized that this decentralized enforcement model has historically served as a critical safeguard in US financial regulation. When fraud occurs, investors rarely experience harm at a national level first.
Instead, losses typically appear within communities, through local promoters, and targeted marketing campaigns. NASAA argues that removing or restricting state authority in the digital asset space would therefore not streamline enforcement, but delay it.
Exclusive federal jurisdiction
At the core of NASAA’s concern lies Section 201(c) of the Digital Commodity Intermediaries Act. As written, the provision grants the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction over digital commodity intermediaries.
NASAA does not dispute the CFTC’s role. However, the association warns that the word “exclusive,” when left unqualified, carries significant legal consequences. Without explicit statutory language preserving state authority, courts may interpret the Act as pre-empting state enforcement actions entirely.
This would mean that even in cases involving clear fraud or misrepresentation, state regulators could be barred from pursuing civil or administrative remedies.
Lessons from prior commodity regulation
NASAA invokes historical experience with commodity regulation to illustrate its warning. In earlier periods, similar jurisdictional structures resulted in widespread fraud when state regulators were sidelined and federal oversight proved insufficiently resourced to address localized misconduct.
As an example, NASAA cites the 1974 amendments to the Commodity Exchange Act, which granted CFTC exclusive jurisdiction and were followed by extensive retail fraud in off-exchange commodities markets. Congress later amended the statute to restore state enforcement authority after recognizing that exclusive federal jurisdiction had contributed to significant investor harm.
NASAA’s requests
NASAA specifically urges Congress to add an explicit anti-fraud preservation provision making clear that nothing in the Digital Commodity Intermediaries Act limits the authority of state regulators to investigate or bring enforcement actions.
NASAA suggests the following language: “Sec. 111. Rule of Construction – Nothing in this Act, or the amendments made by this Act, shall be construed to prohibit or limit any State from pursuing anti-fraud actions under the Commodity Exchange Act or under State commodities laws.”
In addition, NASAA requests clarification of Section 204 to ensure that federal oversight of digital commodity intermediaries does not extend beyond supervisory and registration functions into exclusive enforcement authority. Finally, NASAA calls for corresponding clarification of Section 205 so that remedial and enforcement provisions under the Act cannot be interpreted to eliminate parallel state enforcement.
Definitional instability and its consequences
Beyond jurisdiction, NASAA raises a second, deeply technical concern: definitional inconsistency.
The letter points to language within the DCIA that draws from other legislative proposals, including references to “network tokens” and their treatment under securities law. NASAA warns that these definitions risk undermining the established framework used to identify investment contracts.
This matters because investor protection does not depend solely on labels. It depends on functional analysis: whether an asset is marketed, sold, or structured in a manner that creates reasonable expectations of profit based on the efforts of others.
If statutory definitions prematurely exclude certain digital assets from securities analysis, regulators may lose a critical enforcement tool even when investor harm is evident.
NASAA cautions that conflicting or ambiguous definitions could create regulatory blind spots, allowing bad actors to structure products specifically to evade oversight.