Illinois Stands as Crypto Regulation's New Fortress for Consumer Trust

Illinois Governor JB Pritzker has signed two landmark bills aimed at enhancing consumer protections for digital assets, criticizing the Trump administration’s approach as overly permissive. The Digital Assets and Consumer Protection Act (SB1797) and the Digital Asset Kiosk Act (SB2319) mark the first comprehensive state-level regulatory framework for cryptocurrency in the Midwest, as fraud and scams involving digital assets continue to rise. According to the FBI, Illinois residents lost $272 million to crypto-related fraud in 2024, the highest amount in the nation for that year [2].

Under the new laws, the Illinois Department of Financial and Professional Regulation (IDFPR) will gain authority to regulate digital asset exchanges and businesses, ensuring they maintain sufficient financial resources and implement robust cybersecurity and anti-fraud measures. The legislation aligns regulatory requirements with those for traditional financial services, including mandatory investment disclosures and customer service standards [2]. Governor Pritzker emphasized that these measures are a necessary response to the lack of federal oversight, noting that the Trump administration has “actively deregulated the crypto industry at a time when consumers are increasingly at risk of fraud.” This includes the repeal of a revised IRS rule that expanded the definition of a broker to include decentralized crypto exchanges [3].

The Digital Asset Kiosk Act (SB2319) imposes specific safeguards on digital asset kiosks or ATMs. These include mandatory registration with IDFPR, a 18% cap on transaction fees, and a daily transaction limit of $2,500 for new users. The law also mandates full refunds for victims of scams at kiosks, a measure intended to mitigate financial loss for novice users. According to Rep. Edgar Gonzalez Jr., the legislation ensures that Illinois residents receive “reliable, consistent safeguards, no matter the financial service they utilize for their hard-earned money” [3].

The implementation of these measures is part of a broader national divergence in crypto policy. While states like Texas and Arizona have adopted crypto-friendly approaches, Illinois has opted for a cautious stance, prioritizing consumer protection over rapid industry growth. Governor Pritzker criticized the influence of the “crypto bros” on federal policy, asserting that Illinois is “implementing common-sense protections for investors and consumers” [3]. The legislation includes exemptions for technology development to support innovation while maintaining regulatory guardrails. Digital asset businesses in Illinois have until July 1, 2027, to register with IDFPR [2].

Illinois lawmakers emphasized the importance of these reforms in fostering public trust in the digital asset market. Sen. Mark Walker highlighted that the bill “centers on protecting consumers and investors, while also supporting companies working in the crypto space,” and that it aims to “keep bad actors out of the market and ensure that Illinois remains a leader in high-tech innovation” [2]. The governor’s office further criticized Trump’s regulatory rollbacks, noting that federal legislation has been heavily influenced by industry lobbying efforts rather than consumer interests.

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[2] 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)

[3] 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)