Illinois Enacts Pioneering Consumer Protection Laws Against Cryptocurrency Fraud

CHICAGO, IL — In a decisive move to protect consumers from rising cryptocurrency fraud, Illinois Governor JB Pritzker signed into law two groundbreaking bills on August 18, 2025. The Digital Assets and Consumer Protection Act (SB1797) and the Digital Asset Kiosk Act (SB2319) introduce comprehensive regulations aimed at safeguarding Illinois residents from scams in the evolving digital asset marketplace.

The legislation responds to alarming statistics revealing that Illinois consumers lost $272 million to cryptocurrency fraud in 2024, according to FBI reports. This figure represents the most frequent form of financial fraud statewide, underscoring an urgent need for regulatory intervention.

Key Provisions of the Digital Assets and Consumer Protection Act (SB1797)

Governor Pritzker described the acts as “first-of-their-kind safeguards in the Midwest,” establishing a robust legal foundation for oversight of digital assets. The Digital Assets and Consumer Protection Act mandates:

• 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: Businesses are required to maintain adequate financial resources to manage operational risks effectively.
• Cybersecurity and Anti-Fraud Protocols: Companies must implement comprehensive measures to prevent fraud and strengthen cybersecurity defenses.
• Consumer Protections: The law enforces transparency through investment disclosures, customer service standards, and asset protection measures that parallel those for traditional financial institutions.

Focused Regulation for Crypto Kiosks: The Digital Asset Kiosk Act (SB2319)

The surge in cryptocurrency kiosk scams prompted the passage of the Digital Asset Kiosk Act, which aims to shield consumers who use digital asset kiosks across Illinois. Key features include:

• Operator Registration: Crypto kiosk operators must register with IDFPR by July 1, 2027.
• Anti-Scam Measures: Operators are required to post clear, visible warnings and disclosures about cryptocurrency risks at their kiosks.
• Customer Service and Refund Policies: A toll-free support number must be available, anti-scam policies established, and consumer protection officers designated. Fraudulent transactions for new customers must be refunded, and fees returned to existing customers involved in scams.
• Transaction Limits and Fee Caps: New customers face daily transaction caps of $2,500, and fees are capped at 18%.

A Response to Federal Regulatory Gaps

Governor Pritzker criticized federal crypto policy under the previous Trump Administration as overly permissive, stating, “While the Trump Administration is letting crypto bros write federal policy, Illinois is implementing common-sense protections for investors and consumers.” The Illinois legislation arrives amid concerns that federal consumer protections have weakened as fraudsters’ tactics continually evolve.

Senator Laura Ellman of Naperville, a lead advocate for the kiosk regulation, emphasized the importance of these measures at a time when state regulatory frameworks serve as a necessary shield in the absence of comprehensive federal oversight. “We’re prioritizing consumer protections in Illinois and upholding a clear standard for the future of virtual currency,” Senator Ellman said.

Industry Implications and Compliance Timeline

The laws affect digital asset exchanges, wallet providers, and virtual currency kiosk operators alike, imposing standards similar to traditional financial services on a burgeoning digital economy sector. Businesses currently operating in Illinois, as well as newcomers, have a transition period that extends to July 1, 2027, to comply fully with registration and regulatory obligations.

This legislation places Illinois alongside states like California, New York, and Louisiana, which have also enacted digital asset regulations aimed at combating fraud and protecting investors.

Consumer Awareness and Protection

Consumers are encouraged to be vigilant when engaging with digital asset services and to utilize new protections as these laws come into effect. Clear disclosures, limits on transaction volumes, and refund mechanisms for scam victims are designed to restore trust and foster safe participation in the digital asset marketplace.

As Illinois leads the Midwest in cryptocurrency consumer safeguards, the state’s approach could serve as a template for other jurisdictions seeking to address the volatile and often opaque world of digital assets.