Illinois Ramps Up Crypto Controls as Pritzker Challenges Federal Deregulation

Illinois Governor JB Pritzker has signed two new legislative measures aimed at regulating the cryptocurrency industry, including provisions to enhance consumer protections and address the misuse of crypto ATMs. The Digital Assets and Consumer Protection Act (SB 1797) grants the Illinois Department of Financial and Professional Regulation authority over digital asset exchanges and businesses. The department will require such entities to maintain sufficient financial resources, implement cybersecurity and anti-fraud measures, and comply with standards similar to those of traditional financial institutions [1]. The law also mandates that crypto exchanges provide investment disclosures and follow customer service protocols to ensure transparency and accountability for users [2].

Complementing this framework, the Digital Asset Kiosk Act (SB 2319) introduces specific regulations for crypto ATMs, including mandatory registration with state regulators and caps on transaction fees at 18%. Daily transaction limits for new users are set at $2,500, and operators must provide full refunds to victims of fraud [1]. These measures aim to counter the rising incidents of scams and money laundering linked to the unregulated proliferation of crypto kiosks, particularly in urban areas like Chicago [1]. According to a report, over $272 million was lost in crypto fraud cases in Illinois in 2024, making it the fifth-highest state for such losses [2].

Governor Pritzker criticized the Trump administration for what he described as a lack of federal oversight, stating that Illinois is taking proactive steps to protect consumers and investors while the federal government has "actively deregulated the crypto industry at a time when consumers are increasingly at risk of fraud" [2]. The governor emphasized that the state is committed to implementing "common-sense protections for investors and consumers," contrasting this with a federal approach that he claims has been influenced by industry actors [1].

Lawmakers supporting the legislation, including Senator Laura Ellman, noted the lack of basic consumer protections in the cryptocurrency market and emphasized the need for informed investment decisions by Illinois residents [1]. Rep. Edgar Gonzalez Jr. echoed this sentiment, stating that the new laws are designed to provide consistent safeguards for all financial services used by Illinois consumers [2]. The state’s approach diverges from others, such as Texas and Arizona, which have adopted more industry-friendly stances, while Illinois has taken a more cautious approach in response to growing fraud concerns [2].

The passage of these bills comes amid broader legislative efforts across the U.S. to define the regulatory landscape for digital assets. Illinois’s new regulations add to a patchwork of state-level measures and contrast with recent federal actions, such as the GENIUS Act, which focuses on stablecoins, and the President’s Working Group on Digital Assets report, which promotes innovation in the sector [4]. While the federal government appears to be moving toward a more permissive stance, Illinois’s laws signal a more conservative regulatory approach to protect public interests in the rapidly evolving crypto market [2].

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[1] Pritzker, taking aim at Trump, crypto 'bros,' signs laws to ... (https://chicago.suntimes.com/2025/08/18/crypto-jb-pritzker-donald-trump-digital-currency-cryptocurrency-scam-illinois)

[2] 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)

[3] Illinois Signs Two Crypto Regulatory Bills to Strengthen ... (https://www.panewslab.com/en/articles/cecb0a11-e266-46ac-afd1-dfb941572507)

[4] Blockchain Legal Resource (https://www.hunton.com/blockchain-legal-resource/)