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Illinois Moves to Regulate Crypto, Boost Consumer Protections

  • Two bills could introduce new regulations for digital asset businesses in Illinois.
  • If signed, cryptocurrency operators would need to register with state authorities and follow specific consumer protection measures.
  • Proposed rules include transaction limits, fee caps, disclosure requirements, and mandated customer service options.
  • The legislation requires operators to refund fraudulent transaction amounts and transaction fees to affected customers.
  • Most Republicans oppose the bills, preferring alignment with regulations from other states or at the federal level.

Illinois lawmakers have sent two bills to Governor JB Pritzker that aim to regulate digital asset businesses statewide. These proposals target cryptocurrency operators and seek to establish protections for consumers.

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If the governor signs the bills, all cryptocurrency operators would be required to register with the Illinois Department of Financial and Professional Regulation. One proposal would introduce measures such as transaction limits, a cap on withdrawal fees, and a live portal for customer service.

A separate piece of legislation would require crypto businesses to clearly disclose risks associated with their products and services. They would also have to offer a toll-free customer service phone number, establish anti-fraud measures, and designate staff to enforce consumer protection policies.

“This has been a very highly negotiated bill with the industry, consumer advocates and with the agency,” said Sen. Laura Ellman (D-Naperville). The legislation further requires operators to refund fraudulent transactions for new participants and pay back transaction fees for current customers.

The bills drew opposition mainly from Republican lawmakers, who argue that Illinois should model its rules on regulatory approaches designed by other states. Sen. Steve McClure (R-Springfield) noted opposition from Coinbase, a major cryptocurrency exchange, during legislative discussions. “Coinbase is, as far as I know, still in opposition to this bill,” McClure said while questioning the measure’s current support.

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Democrats indicated that Coinbase favors federal regulation and was unlikely to support state-level rules. Sen. Mark Walker (D-Arlington Heights) also asserted this position. Ellman emphasized that the priority is to enhance consumer protections across Illinois.

Both bills passed in the House and Senate with mostly partisan support, while a few Republicans voted alongside Democrats. The proposed regulations would mark a significant shift in the oversight of digital asset operators if enacted.

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