Illinois Enacts Landmark Laws to Combat Cryptocurrency Fraud and Protect Consumers
CHICAGO, August 19, 2025 – In a pioneering move within the Midwest, Illinois Governor JB Pritzker has signed two comprehensive bills aimed at safeguarding consumers from the rising tide of cryptocurrency fraud, marking a significant stride in digital asset regulation.
Prompted by a 2024 FBI report which revealed that Illinois consumers suffered losses totaling $272 million due to cryptocurrency-related fraud—the most prevalent type of financial fraud in the state—the new laws establish robust protections and regulatory frameworks for digital asset businesses and kiosk operators.
Key Legislation: Digital Assets and Consumer Protection Act (SB1797)
The Digital Assets and Consumer Protection Act, also known as SB1797, sets forth stringent requirements for companies dealing with cryptocurrencies and other digital assets within Illinois. Major provisions include:
- Registration Requirements: Digital asset businesses must register with the Illinois Department of Financial and Professional Regulation (IDFPR) by July 1, 2027.
- Financial Safeguards: Companies are mandated to maintain sufficient financial resources to operate responsibly and manage risks effectively.
- Cybersecurity and Anti-Fraud Measures: Businesses must implement comprehensive cybersecurity protocols and systems to prevent fraud.
- Customer Protections: The law demands transparent investment disclosures, enforced customer service standards, and safeguards for consumer assets akin to traditional financial institutions.
Additional Protections: Digital Asset Kiosk Act (SB2319)
State Senator Laura Ellman championed the Digital Asset Kiosk Act (SB2319), which directly targets the growth of fraudulent activity in cryptocurrency kiosks—physical machines used to buy and sell digital currencies. This law includes:
- Mandatory registration of kiosk operators with IDFPR by July 1, 2027.
- Requirements for posting clear, conspicuous warnings and disclosures on kiosks to alert users of potential risks.
- Obligation for operators to maintain toll-free customer service lines.
- Anti-scam policies enforced by designated consumer protection officers within kiosk operations.
- Provisions to refund fraudulent transactions for new customers and transaction fees for existing customers impacted by scams.
Senator Ellman emphasized that these measures are critical to filling the void left by federal regulatory gaps and to ensuring that Illinois residents are not subjected to unchecked crypto scams.
Governor Pritzker’s Stance on Crypto Oversight
Governor Pritzker contrasted Illinois’ proactive approach with what he characterized as federal inaction under the previous administration, stating, “While the Trump Administration is letting crypto bros write federal policy, Illinois is implementing common-sense protections for investors and consumers.” He underscored the necessity of state-level leadership amid evolving fraud tactics and weakened federal consumer safeguards.
He affirmed the state’s commitment to defending financial integrity and the hard-earned assets of Illinoisans, underlining the legislation as a clear message against exploitation in the cryptocurrency space.
Context and Impact
Illinois joins a growing number of states — including California, New York, and Louisiana — enacting specific digital asset regulations that introduce licensing, registration, and safety requirements akin to those applied to traditional financial services. Such measures align with broader trends to protect consumers in a market characterized by rapid technological innovation and heightened risk of fraud.
These laws also provide transition periods allowing existing businesses time to comply, balancing consumer protection with industry adaptation.
Looking Forward
By instituting these first-of-their-kind safeguards in the Midwest, Illinois sets a precedent for comprehensive cryptocurrency oversight at the state level. These initiatives empower consumers with clearer information and recourse options, fostering a safer environment for digital asset investment and use.
The laws took effect immediately upon signing, signaling swift action to stem fraud and restore consumer confidence in Illinois’ cryptocurrency markets.