On August 18, 2025, Illinois Governor JB Pritzker signed two bills that created, in his words, first-of-their-kind safeguards in the Midwest for cryptocurrency and other digital assets. The legislation was in part a response to an FBI report that Illinois consumers lost $272 million in fraud cases involving cryptocurrency in 2024, representing the most common type of financial fraud. And, not surprisingly for a person who reportedly sees himself as a future Democratic presidential candidate, Governor Pritzker, brought the Trump Administration into the picture, saying: “While the Trump Administration is letting crypto bros write federal policy, Illinois is implementing common-sense protections for investors and consumers. At a time when fraudsters continue to evolve and consumer protections are being eroded at the federal level, Illinois is sending a clear message that we won’t tolerate taking advantage of our people and their hard-earned assets.”
The first law is the Digital Assets and Consumer Protection Act (SB1797), which establishes a robust regulatory framework for crypto exchanges and digital asset businesses operating in Illinois. Key provisions include:
- Registration Requirements: All digital asset businesses must register with the Illinois Department of Financial and Professional Regulation (IDFPR) by July 1, 2027.
- Financial Safeguards: Companies must maintain adequate financial resources to operate effectively and manage risks.
- Cybersecurity and Anti-Fraud Measures: Businesses are required to implement comprehensive cybersecurity protocols and fraud prevention systems.
- Customer Protections: The law mandates investment disclosures, customer service standards, and asset safeguards similar to those in traditional financial services
The second law is the Digital Asset Kiosk Act (SB2319), which targets crypto ATMs and kiosks, which have become popular but are vulnerable points of access for consumers. In a recent post we discussed how different countries have followed a variety of paths for regulating crypto ATMs, including a recent outright ban in New Zealand. The provisions of the Illinois law include:
- Mandatory Registration: Kiosk operators must register with IDFPR and disclose all kiosk locations.
- Fee and Transaction Caps: Fees are capped at 18%, and daily transaction limits for new users are set at $2,500.
- Refunds for Scam Victims: Operators must issue full refunds to new customers who fall victim to scams.
- Compliance Officers: Each operator must designate both a compliance officer and a consumer protection officer.
These measures are designed to prevent common abuses and ensure that consumers engaging with digital assets have access to the same protections they would expect in traditional financial markets.
At the federal level, the recent passage of the GENIUS Act was a pivotal moment in terms of being the first comprehensive federal digital asset legislation. But that law is limited to governing stablecoins. Putting that to the side, the U.S. still lacks a unified federal framework for digital assets, with various agencies like the SEC, CFTC, FinCEN, and IRS overseeing different aspects based on existing laws. Illinois thus joins a growing number of states stepping into what they perceive as the regulatory vacuum left by Congress and reflecting their belief that digital assets should not be exempt from basic consumer protections. Illinois legislators obviously believe that its new laws are important steps towards a more secure crypto market within the state. However, the patchwork of state-level regulation, and the absence of a cohesive national approach, continues to present challenges for businesses and consumers operating across state lines.
