Illinois Regulators Step In as Crypto Consumers Cry Foul

Illinois has implemented new legislation to increase regulatory oversight of cryptocurrency, setting the stage for stricter governance of digital assets within the state. Governor JB Pritzker signed two bills—SB1797, the Digital Assets and Consumer Protection Act, and SB2319, the Digital Asset Kiosk Act—on August 18, 2025. These measures aim to provide robust consumer protections and establish a regulatory framework for digital asset businesses, including cryptocurrency exchanges and kiosks. The move follows reports from the FBI showing that Illinois residents lost $272 million to crypto-related fraud in 2024, making it the fifth-highest state for such losses.

Under SB1797, the Illinois Department of Financial and Professional Regulation (IDFPR) will oversee digital asset exchanges and businesses. This includes mandates for cybersecurity, anti-fraud measures, and financial safeguards, bringing the crypto industry in line with traditional financial services in terms of compliance and consumer protection. Companies must maintain sufficient financial resources and implement procedures to mitigate key risks such as money laundering and data breaches. The bill also requires investment disclosures and customer service standards to ensure transparency and accountability. These regulatory measures are intended to deter fraud and reduce the likelihood of consumer harm.

SB2319 focuses specifically on digital asset kiosks—often referred to as crypto ATMs. It mandates that kiosk operators register with IDFPR, submit detailed location reports, and provide full refunds to new customers who fall victim to scams. Transaction fees are capped at 18%, and daily transaction limits for new users are set at $2,500. These restrictions aim to prevent overexposure to risky or fraudulent practices and to give consumers greater control over their transactions. The law also emphasizes transparency, requiring kiosks to display disclosures about potential scams and transaction risks.

The legislation has been framed as a necessary step to address the growing risks associated with crypto transactions in the absence of federal oversight. Governor Pritzker criticized the Trump administration for allowing “crypto bros” to shape policy, noting that federal deregulation has left consumers vulnerable to fraud. He pointed to the administration’s decision to strip the IRS of its authority to regulate decentralized brokers as a key example of this trend. The legislation in Illinois contrasts sharply with more pro-crypto policies in Republican-leaning states like Texas and Arizona, highlighting a widening divergence in state-level approaches to digital assets.

Supporters of the new laws, including state representatives and IDFPR officials, have emphasized the need for balanced regulation that protects consumers while fostering innovation. Rep. Edgar Gonzalez, Jr., underscored that the measures provide credibility to businesses entering the digital asset space and help build public trust in cryptocurrencies. Sen. Laura Ellman noted that the legislation fills gaps in consumer protections and empowers residents to make informed decisions in a rapidly evolving market. The bills include exemptions for technology development, ensuring that innovation is not stifled by overly restrictive rules.

The implementation timeline is staggered, with certain consumer protections taking immediate effect, such as refund guarantees for fraud victims. Digital asset businesses have until July 1, 2027, to comply with registration and regulatory requirements. The state has also signaled its commitment to maintaining a responsible approach to digital assets, with IDFPR Secretary Mario Treto calling the legislation a “monumental victory” for consumer safety and market transparency.

Source:

[1] 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)

[2] Gov. Pritzker Signs Historic Legislation to Protect Consumers from Cryptocurrency Scams (https://idfpr.illinois.gov/content/soi/idfpr/en/news/2025/gov-pritzker-signs-historic-legislation-to-protect-consumers-from-cryptocurrency-scams.html)

[3] Illinois Quick Hits: Pritzker Signs Crypto Regulations (https://www.thecentersquare.com/illinois/article_efb65ab5-d433-4cd1-93de-7cdcabdf5b3b.html)