This post confuses me because it has a real innocence that you don't normally display.

Why is stopping fraud a good thing?

Until you can answer that question I don't think it really possible to overcome the issues you have raised. I'd argue that most governments don't have a real interest is stopping fraud. They might have an interest in appearing as if they are against fraud but it's security theater.

There are two reasons for this. The first is that one has to weigh the cost of stopping fraud with the cost of fraud itself. This is why structuring remains such a bothersome problem despite all the laws against it. In economics they call this the free rider problem. It is often cheaper to let people get away with stealing than perusing the thief.

The second problem is that the chains that bind the consumer bind the government too. Likewise, a wild west type of environment provides good cover for all sorts of nefarious activities.

I think there is very little real interest in "cleaning up the internet".