- Illinois will regulate crypto firms to protect investors through new laws that set financial and security standards.
- Crypto kiosks in Illinois must register cap fees at 18% and give full refunds to scam victims.
- Illinois passed the laws after ranking fifth in the nation for crypto fraud losses in 2024.
Illinois has passed two new laws to regulate cryptocurrency activity and protect consumers. On Monday, Governor JB Pritzker signed the Digital Assets and Consumer Protection Act and the Digital Asset Kiosk Act. These measures place Illinois among the first states in the Midwest to introduce crypto-specific safeguards.
The new legislation will see the Illinois Department of Financial and Professional Regulation regulating the crypto business and exchanges. Firms should ensure that they have enough financial reserves, use cybersecurity strategies, and have anti-fraud mechanisms. They must also deliver customer services that are on par with the existence of traditional financial institutions.
Rules Set for Crypto Kiosks and Refunds
The second law focuses on cryptocurrency kiosks. Operators must now register with the state and clearly report their machine locations. The law caps transaction fees at 18% and limits new user transactions to $2,500 per day.
Importantly, kiosk providers must offer full refunds to fraud victims. This rule aims to reduce crypto scams often tied to digital ATMs. These regulations apply to both existing and new operators across the state.
State Pushes Back on Federal Deregulation
The state’s action comes during rising tensions between state and federal crypto policy. Illinois criticized federal regulators for relaxing oversight of the digital asset sector. The state cited concerns that weakened federal policies have left consumers exposed to growing fraud risks.
Illinois leaders referenced a recent federal decision to reverse an IRS rule targeting decentralized finance platforms. This move removed certain DeFi platforms from being classified as brokers. Illinois officials said such changes promote deregulation at the cost of consumer protection.
Fraud Losses Drive Legislative Response
In the year 2024, Illinois had $272 million in losses of crypto fraud ranking number five in the country. Policymakers used these figures to support the need to act in order to regulate. This is aimed at mitigating fraud and having more visibility in the digital asset trade.
The new regulations take effect immediately. However, digital asset businesses have until July 1, 2027, to fully comply and register with the state.
Earlier this year, a separate bill proposed creating a Bitcoin reserve for the state treasury. The legislation aimed to hold Bitcoin as a long-term investment. That bill did not advance past the committee stage and remains inactive. Other U.S. states also passed laws to develop Bitcoin reserves.
Illinois remains cautious but committed to building safer practices in the digital asset space while balancing innovation and regulation.
