Illinois Governor JB Pritzker signed two bills, the Digital Assets and Consumer Protection Act (SB1797) and the Digital Asset Kiosk Act (SB2319), establishing the Midwest’s first comprehensive cryptocurrency consumer protections.
These laws aim to curb fraud, with Illinois residents having lost $272 million to crypto scams in 2024, per FBI data. SB1797 grants the Illinois Department of Financial and Professional Regulation (IDFPR) authority to oversee digital asset exchanges, mandating financial reserves, cybersecurity, anti-fraud measures, and customer service standards akin to traditional finance.
SB2319 regulates crypto ATMs, requiring operator registration, an 18% fee cap, a $2,500 daily transaction limit for new users, and full refunds for scam victims. Pritzker criticized the Trump administration’s deregulatory stance, particularly for overturning an IRS rule on decentralized crypto brokers, accusing it of letting “crypto bros” shape federal policy.
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He contrasted Illinois’ consumer-focused approach with federal policies driven by industry lobbying, which prioritize limited oversight over protections. The bills drew backlash from crypto stakeholders like Coinbase’s Chief Policy Officer Faryar Shirzad and Chief Legal Officer Paul Grewal, who called Pritzker’s remarks “uninformed” and noted bipartisan support for federal crypto laws like the GENIUS and CLARITY Acts.
Digital asset businesses have until July 1, 2027, to comply, though some protections, like scam refunds, are effective immediately. The Digital Assets and Consumer Protection Act (SB1797) and Digital Asset Kiosk Act (SB2319) introduce robust safeguards against fraud, which cost Illinois residents $272 million in 2024.
Requirements like financial reserves, cybersecurity standards, and immediate scam refunds for crypto ATM users reduce risks for retail investors. Clear regulations and consumer-focused measures, such as the 18% fee cap and $2,500 daily transaction limit for new crypto ATM users, may boost confidence in digital assets, encouraging broader adoption among cautious consumers.
Stricter regulations could lead to higher fees or reduced access to certain crypto services, as businesses pass compliance costs to users or limit operations in Illinois. Crypto exchanges and ATM operators must meet stringent requirements by July 1, 2027, including registration, financial reserves, and cybersecurity protocols.
Smaller firms or startups may struggle with these costs, potentially stifling innovation or driving businesses to less-regulated states. Illinois’ large economy and Chicago’s financial hub status make these laws influential. Companies like Coinbase, already critical of the legislation, may face operational challenges, potentially reducing services or exiting the state if compliance proves too costly.
As the Midwest’s first comprehensive crypto consumer protection framework, Illinois’ laws could inspire other states to adopt similar measures, fragmenting the U.S. regulatory landscape and complicating nationwide operations for crypto firms.
Pritzker’s criticism of federal deregulation and “crypto bros” highlights a growing divide between state-level consumer protections and industry-backed federal efforts like the GENIUS and CLARITY Acts. This could lead to a patchwork of state laws, complicating compliance for businesses operating across jurisdictions.
Illinois’ proactive stance may pressure federal regulators to prioritize consumer protections over industry-friendly policies, especially as crypto scams rise. It could also embolden other states to challenge federal inaction, as seen in California’s recent crypto legislation.
Pritzker’s rhetoric risks alienating crypto advocates and businesses, potentially positioning Illinois as less crypto-friendly compared to states like Wyoming or Texas. However, it may resonate with voters prioritizing consumer safety over industry growth.
The laws strike a balance between fostering crypto adoption and curbing fraud, but heavy-handed regulation could deter investment in Illinois’ blockchain sector, while lighter federal policies might attract firms elsewhere. Given Illinois’ economic weight, its regulatory model could shape national debates on crypto oversight, especially as 2024’s $4.6 billion in U.S. crypto fraud losses (per FBI data) underscores the need for action.
While Illinois’ laws strengthen consumer protections and set a regional precedent, they may increase costs for businesses, fuel state-federal tensions, and influence the trajectory of U.S. crypto regulation. The long-term impact hinges on how firms adapt by 2027 and whether other states follow suit.