Illinois Enacts Landmark Crypto Laws to Boost Consumer Protections

Illinois has taken a significant step toward strengthening consumer protections in the cryptocurrency space by enacting two landmark laws: the Digital Assets and Consumer Protection Act (DACPA) and the Digital Asset Kiosk Act. These measures represent a pivotal shift in state-level regulation of digital assets, setting a potential template for other jurisdictions as the crypto industry continues to evolve. Signed into law by Governor JB Pritzker, the bills aim to address long-standing concerns over fraud, data breaches, and inadequate recourse for consumers in the fast-moving crypto market.

The DACPA grants the Illinois Department of Financial and Professional Regulation (IDFPR) regulatory authority over crypto exchanges and related businesses operating in the state. This brings digital asset firms under similar standards as traditional financial institutions, requiring them to maintain adequate financial reserves, adopt robust cybersecurity protocols, implement anti-fraud measures, and clearly disclose investment risks to consumers. Additionally, these businesses must meet customer service standards comparable to those of conventional financial services, ensuring accountability and transparency.

The second piece of legislation, the Digital Asset Kiosk Act, focuses on regulating crypto ATMs, which have increasingly become a point of vulnerability for fraud and abuse. Under the new rules, all crypto ATM operators must register with the state, a step that enhances transparency. The law also mandates that operators provide refunds to victims of scams conducted through their kiosks, introduces an 18% fee cap on transactions, and imposes a $2,500 daily transaction limit for new users. These measures are intended to curb illicit activities and promote fair practices at the point of digital asset exchange.

For Illinois residents, the new laws introduce a stronger layer of consumer protection, offering greater confidence in engaging with cryptocurrencies. The proactive regulatory approach taken by the state contrasts with previous federal efforts that leaned toward deregulation, signaling a clear commitment to fostering a secure and responsible digital economy. Governor Pritzker emphasized that the legislation reflects “common-sense protections for investors and consumers,” underscoring the balance between innovation and oversight.

The enactment of these laws not only provides clarity for crypto businesses but also empowers consumers with clearer recourse, increased transparency, and a safer environment for digital asset transactions. By setting a comprehensive regulatory framework, Illinois is positioning itself as a leader in addressing the challenges and opportunities of the crypto space, potentially influencing other states as they consider similar measures.

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Source: [1] Crucial Crypto Consumer Protections: Illinois Enacts Groundbreaking Laws (https://coinmarketcap.com/community/articles/68a3f90d6027ef4947d2bed8/)