Illinois Pits Consumer Safety Against Trump’s Crypto Deregulation Push

Illinois has enacted new regulatory measures targeting the growing risks associated with cryptocurrency, marking a significant step toward enhancing consumer protections and curbing fraud. Governor JB Pritzker signed two landmark bills—SB1797 and SB2319—on August 18, 2025, positioning the state as a pioneer in the Midwest for digital asset regulation. These laws aim to address the $272 million in losses reported by Illinois residents from crypto-related fraud in 2024, as detailed by the FBI [1].

SB1797, the Digital Assets and Consumer Protection Act, grants the Illinois Department of Financial and Professional Regulation (IDFPR) authority to oversee digital asset exchanges and businesses. The legislation mandates that crypto operators maintain sufficient financial resources, implement robust cybersecurity measures, and provide transparent disclosures to consumers. The bill, which passed the state Senate in April, aligns the oversight of digital assets with the standards applied to traditional financial services [2]. Companies now have until July 1, 2027, to comply with registration and operational requirements under the law [1].

The second bill, SB2319, or the Digital Asset Kiosk Act, focuses on crypto ATMs and requires operators to register with IDFPR and comply with consumer safeguards. These include transaction fee caps of 18%, daily withdrawal limits of $2,500 for new users, and mandatory refunds for victims of fraud. The law also mandates that kiosk operators maintain compliance officers and provide direct customer support [3]. Such protections are effective immediately for certain provisions, such as refunds, while full registration of businesses will follow by 2027 [1].

The regulatory move reflects a broader political divergence between state and federal approaches to crypto. Governor Pritzker criticized the Trump administration for “letting crypto bros write federal policy” and highlighted the administration’s efforts to deregulate the industry, including the reversal of an IRS rule that would have classified decentralized finance (DeFi) platforms as brokers [4]. This contrast underscores the ongoing debate over how to balance innovation with risk mitigation in the crypto space.

Illinois’ actions come amid a national trend of increased regulatory activity. Other states, including Vermont, Arizona, and Nebraska, have also introduced measures to combat crypto fraud. For instance, Arizona and Oklahoma now require refunds for fraud victims, while Nebraska has established a licensing system for kiosk operators [1]. Illinois joins this growing group of states seeking to protect consumers without stifling innovation.

The implementation of these laws signals a strategic shift in how Illinois intends to engage with the crypto market. While the state’s approach contrasts with that of states like Texas, which has explored building a strategic Bitcoin reserve, Illinois is prioritizing consumer safety and financial stability. This regulatory framework is expected to influence other states as they navigate the evolving landscape of digital assets.

Source:

[1] Illinois Passes First-of-Its-Kind Crypto Bills, Criticizes Trump Deregulation (https://coinpedia.org/news/illinois-passes-first-of-its-kind-crypto-bills-criticizes-trump-deregulation/)

[2] Illinois Governor Slams Trump's 'Crypto Bros' in New Bill (https://cointelegraph.com/news/illinois-governor-slams-trump-crypto-bros-signs-two-new-crypto-bills)

[3] Illinois Breaks From Trump With Strict New Crypto Laws (https://icobench.com/news/illinois-breaks-from-trump-with-strict-new-crypto-laws/)

[4] Illinois Governor Signs Landmark Crypto Bills Targeting Fraud (https://cryptobriefing.com/illinois-crypto-consumer-protection-laws/)