Illinois Enacts Landmark Laws to Shield Consumers from Cryptocurrency Fraud
CHICAGO, IL — In a decisive move to protect its residents from the growing scourge of cryptocurrency fraud, Illinois Governor JB Pritzker signed two groundbreaking bills into law on August 18, 2025. These laws establish some of the Midwest’s most comprehensive safeguards for consumers engaging in digital asset transactions, positioning Illinois as a national leader in crypto regulation.
Historic Legislation Targets Crypto Scams
The new laws, the Digital Assets and Consumer Protection Act (SB1797) and the Digital Asset Kiosk Act (SB2319), address the alarming rise in fraud associated with cryptocurrency. According to the FBI, Illinois consumers lost a staggering $272 million to crypto scams in 2024, constituting the most common financial fraud reported in the state over the past year.
Governor Pritzker underscored the importance of the legislation, stating, “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.”
Key Provisions of the Digital Assets and Consumer Protection Act
- Registration Requirements: All digital asset businesses operating in Illinois 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 ensure operational effectiveness and risk management.
- Cybersecurity and Anti-Fraud Measures: Businesses must implement robust cybersecurity protocols and fraud prevention systems to protect consumers.
- Customer Protections: The Act requires clear investment disclosures, standardized customer service, and safeguards for consumer assets on par with traditional financial institutions.
Protecting Consumers Using Crypto Kiosks
The Digital Asset Kiosk Act (SB2319) specifically addresses a rising vector for consumer fraud: cryptocurrency kiosks. These kiosks, growing in popularity statewide, have been exploited by fraudsters to steal from Illinois residents.
- Kiosk operators must register with IDFPR by July 1, 2027.
- Mandatory posting of clear warnings and disclosures about the risks involved with virtual currency is required.
- Operators must maintain a toll-free customer service number and enact anti-scam policies.
- The law obligates kiosk operators to designate consumer protection officers responsible for oversight.
- Importantly, frustrated consumers who fall victim to fraudulent transactions are entitled to refunds, with new users protected from losing substantial sums.
As Senator Laura Ellman, the law’s proponent, stated, “This law empowers Illinois consumers to make informed investments by eliminating gray areas in the crypto industry that are susceptible to scams. In the absence of federal consumer protections in the cryptocurrency space, state regulatory frameworks are one key step toward holding operators responsible for protecting consumer investments.”
Addressing Gaps in Federal Oversight
The Illinois legislation was partly a response to the federal government’s limited regulatory action on cryptocurrencies. Illinois has stepped forward to fill that gap, establishing a framework similar in rigor to traditional finance regulations. Businesses will have a transition period before full compliance is required, but the law sends a strong message that cryptocurrency operations in Illinois must adhere to responsible and transparent standards.
Impact and Outlook
Illinois was ranked sixth nationally in the amount lost to crypto scams, emphasizing the urgent need for these measures. The bills are expected to significantly reduce fraudulent activity and enhance consumer confidence in digital asset markets. The registration and operational requirements will also enhance transparency in a historically opaque sector.
This legislative milestone could serve as a model for other states considering how to balance innovation in digital currency with essential consumer protections.
Published August 28, 2025