I've often read discussion about how you can't regulate this sort of thing because the industry moves so fast that what's a best practice today can be tomorrow's horrible security (then enforced by law). But, isn't it possible to legislate this on a blacklist basis? "Fine of up to $X if you're storing passwords in plaintext. Fine of up to $X if you're limiting the length of passwords to Outlawing a small set of easil…
That is, don't legislate implementation but consequences.