Illinois has become the first Midwestern state to pass comprehensive consumer protections for crypto, as Governor JB Pritzker signed two new bills into law on Monday. The move marks a sharp break from federal deregulatory trends, with Pritzker openly criticizing President Donald Trump for letting “crypto bros” shape national policy.
“While the Trump Administration is letting crypto bros write federal policy, Illinois is implementing common-sense protections for investors and consumers,” Pritzker said during the signing ceremony.
Two new laws to regulate crypto exchanges and ATMs
The first measure, the Digital Assets and Consumer Protection Act (SB 1797), puts crypto businesses and exchanges under the oversight of the Illinois Department of Financial and Professional Regulation. The law requires firms to:
- Maintain adequate financial reserves
- Adopt cybersecurity and anti-fraud measures
- Provide clear disclosures to investors
- Uphold customer service standards similar to banks and brokerages
The second measure, the Digital Asset Kiosk Act (SB 2319), targets crypto ATMs, often used in scams, by requiring operators to register with state regulators, offer refunds to victims, and cap transaction fees at 18%. It also limits daily transactions for new customers to $2,500.
Representative Edgar Gonzalez Jr., a co-sponsor, said the rules were needed to ensure “reliable, consistent safeguards, no matter the financial service people choose to use for their money.”
A response to mounting crypto fraud
Illinois regulators pointed to staggering fraud losses as the backdrop for the laws. The FBI estimates that $272 million was lost in crypto-related fraud in Illinois in 2024, ranking the state fifth nationwide for losses. Officials argue that without stricter guardrails, everyday residents will remain vulnerable to scams, hacks, and predatory fees.
Political divide over crypto policy
The move highlights the growing partisan split over crypto in the US. Since Republicans’ November election win, states like Texas and Arizona have embraced looser regulation to attract crypto businesses, while Democratic-led states like Illinois are tightening oversight.
Pritzker’s office continued to attack Trump’s approach, saying his administration has “actively deregulated the crypto industry at a time when consumers are increasingly at risk.” They cited Trump’s April decision to overturn an IRS rule that would have broadened the definition of “broker” to cover DeFi exchanges, a rule meant to increase tax compliance.
Illinois rejected a Bitcoin reserve
Notably, Illinois also turned down a more crypto-friendly proposal earlier this year. State Representative John Cabello introduced a bill in January to create a Bitcoin reserve for the state treasury, but the measure failed to pass committee.
For now, Illinois is setting itself up as a test case for stricter state-led crypto oversight, positioning consumer protection as the priority, even as other states bet on deregulation to boost industry growth.
