Illinois Cracks Down on Crypto, Defying Trump’s Deregulatory Push

Illinois has enacted two new laws aimed at regulating cryptocurrency transactions, imposing stricter oversight on digital asset exchanges and capping fees for crypto kiosks at 18%. The Digital Assets and Consumer Protection Act (SB 1797) grants the Illinois Department of Financial and Professional Regulation authority to regulate digital asset exchanges and businesses. Under the law, crypto companies must maintain sufficient financial resources, implement robust cybersecurity and anti-fraud measures, provide detailed investment disclosures, and adhere to customer service standards akin to traditional financial institutions [1]. The legislation was signed by Governor JB Pritzker, who criticized the Trump administration for its perceived leniency on crypto regulation [2].

The second law, the Digital Asset Kiosk Act (SB 2319), directly targets cryptocurrency kiosks or ATMs. It mandates that operators register with state regulators, provide full refunds to victims of scams, and limit transaction fees to 18%. Additionally, the law restricts daily transactions for new users to $2,500 [1]. The implementation of these measures comes amid a surge in crypto-related fraud in the state, with $272 million lost to scams in 2024, ranking Illinois fifth nationally for losses [1]. Rep. Edgar Gonzalez Jr. emphasized the need for these regulations, stating that Illinois residents deserve consistent safeguards for their financial assets [1].

Governor Pritzker’s office continued to criticize Trump’s policies on crypto, claiming that the administration has “actively deregulated the crypto industry at a time when consumers are increasingly at risk of fraud.” Specifically, they pointed to Trump’s April signing of a bill that overturned an IRS rule that had expanded the definition of a broker to include decentralized finance exchanges [1]. Pritzker contrasted this approach with Illinois’s stance, calling it a clear signal that the state is not willing to tolerate exploitation of its citizens’ assets [1].

Notably, Illinois has not adopted a pro-crypto stance at the legislative level. A proposed bill, House Bill 1844, introduced by Rep. John Cabello, aimed to create a strategic Bitcoin reserve for the state treasury. However, the bill failed to pass at the committee level, indicating a broader skepticism toward state-level investment in digital assets [1]. Despite the new regulatory framework, the state remains cautious about embracing the crypto industry fully, prioritizing consumer protection over speculative growth.

The implementation of these new laws reflects a growing trend of state-level divergence in crypto regulation across the U.S. While some states, such as Texas and Arizona, have embraced the industry, Illinois has opted for a more restrictive approach. These developments underscore the increasing role of states in shaping the regulatory environment for digital assets in the absence of a unified federal framework [1].

Source: [1] Illinois governor blasts Trump's 'crypto bros' in new bill ... (https://cointelegraph.com/news/illinois-governor-slams-trump-crypto-bros-signs-two-new-crypto-bills) [2] Illinois quick hits: Pritzker signs crypto regulations (https://www.thecentersquare.com/illinois/article_efb65ab5-d433-4cd1-93de-7cdcabdf5b3b.html)