Just make IoT doodad manufacturers liable for bad things that happen with them and the problem will sort itself out, no state intervention with the potential for universal surveillance and totalitarian control needed.
This is a very common opinion, but if you delegate the assignment of liability to the court, then you will get even more problems about state overreach.
Consider the following scenario: A consumer buys some smart lights for their house. The smart lights are hacked, and hacker uses these smart lights as a proxy to launch ransom-ware attacks against hospitals. The hospitals are collectively "forced" to pay $100 million in ransom to continue their operations. Who is liable in this case? The consumer who didn't put the smart lights behind a firewall? The hospitals who had employees fall for phishing emails? Or the IOT company for not updating the security of their devices? If you don't have legislation defining what makes someone liable, then unaccountable judges will be forced to legislate from the bench about who is liable and who is not. If you don't like the decision, then you can't just vote them out of office the same way you can with legislators.
Lurk https://old.reddit.com/r/linguisticshumor/ and try to understand all the jokes.
That was my main strategy for shifting gears from being a professional machine learning theory researcher to doing computational linguistics work.
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I do not want to live in a word where people buying a $10 device from walmart have to sign a contract.
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