Illinois Becomes Crypto Regulation Pioneer to Shield Consumers from Scams

Illinois has moved to establish a regulatory framework for cryptocurrency by enacting two landmark consumer protection bills, following escalating concerns over fraud and market vulnerabilities. Governor JB Pritzker signed the Digital Assets and Consumer Protection Act (SB1797) and the Digital Asset Kiosk Act (SB2319) on August 18, 2025, marking the first such legislation in the Midwest to safeguard digital asset consumers. The bills aim to bring transparency and accountability to the fast-growing but largely unregulated space, which has left many residents vulnerable to scams.

According to the FBI, Illinoisans lost $272 million in cryptocurrency-related fraud cases in 2024, the highest total in the state’s history and the fifth-highest in the U.S. The new legislation grants the Illinois Department of Financial and Professional Regulation (IDFPR) the authority to regulate digital asset exchanges and businesses. This includes enforcing cybersecurity and anti-fraud measures, maintaining adequate financial resources, and ensuring customer disclosures and service standards mirror those of traditional financial institutions [1]. The move aligns with broader state efforts to protect consumers amid what Governor Pritzker described as a “federal erosion of consumer protections.”

The Digital Asset Kiosk Act (SB2319) introduces specific consumer safeguards for users of cryptocurrency kiosks, which have become common points of entry for new investors. Under the law, kiosk operators must register with IDFPR, disclose key information, and provide full refunds to victims of scams. The act also caps transaction fees at 18% and limits daily transactions for new users to $2,500, aiming to prevent large, potentially risky transactions from being executed without adequate awareness [2]. These measures are expected to reduce the frequency and severity of fraud at crypto kiosks, a sector that has attracted both innovation and exploitation.

The legislation includes exemptions for technological development to support innovation in Illinois, reflecting the state’s dual focus on protection and growth in the digital asset space. Lawmakers such as Sen. Mark Walker (D-Arlington Heights) emphasized that the bills foster a more secure and trustworthy environment for startups and entrepreneurs while ensuring that consumer interests remain central. The state’s approach contrasts sharply with the federal stance under the Trump administration, which has been criticized for reducing oversight of the crypto industry, including the removal of IRS authority to regulate decentralized exchanges [1].

Implementation of the new laws will be phased. Certain consumer protections, such as scam-related refunds, take effect immediately, while digital asset businesses have until July 1, 2027, to fully comply with registration and operational requirements. The legislation represents a strategic effort to balance innovation with responsibility, ensuring that Illinois remains competitive in the evolving digital economy while prioritizing the security of its residents’ financial assets [2].

Source: [1] Gov. Pritzker Signs Historic Legislation to Protect Consumers (https://gov-pritzker-newsroom.prezly.com/gov-pritzker-signs-historic-legislation-to-protect-consumers-from-cryptocurrency-scams) [2] Illinois governor slams Trump 'crypto bros' signs two new crypto bills (https://cointelegraph.com/news/illinois-governor-slams-trump-crypto-bros-signs-two-new-crypto-bills)