Illinois Governor JB Pritzker has signed comprehensive legislation to regulate the cryptocurrency industry, aiming to protect consumers and combat fraud, reflecting the state's proactive approach amid limited federal oversight.

Pritzker criticized the federal government for its lack of regulation, contrasting Illinois' strict measures with the Trump administration's leniency towards crypto 'bros'.

The new laws grant Illinois broad regulatory authority over digital currency businesses, including requirements for financial stability, cybersecurity, and anti-fraud measures, with all digital asset firms required to register by July 1, 2027.

Part of the legislation caps transaction fees at 18% at crypto kiosks and mandates full refunds for victims of scams.

These regulations specifically target over 1,000 crypto kiosks operating across Chicago at convenience stores, gas stations, and currency exchanges, which have been exploited for scams and money laundering.

The legislation was driven by high-profile cases where individuals lost large sums—such as over $15,000 after a fake jury duty scam and savings sent to a fictitious romantic partner—highlighting the need for consumer protections.

The Digital Asset Kiosk Act requires registration of crypto ATM operators, limits daily transactions to $2,500 for new users, and mandates refund provisions for scams, aiming to curb criminal exploitation.

Illinois's approach contrasts with states like Texas and Arizona, which have adopted more industry-friendly policies, reflecting a cautious stance balancing investor protection with industry oversight.

Senator Laura Ellman emphasized the importance of consumer protections in the virtual currency market to prevent fraud and enable informed investments, supporting the legislation's protective measures.

The legislation authorizes the Illinois Department of Financial and Professional Regulation to oversee digital asset exchanges, requiring compliance with standards similar to traditional financial institutions, including disclosures and safeguards against risks like fraud and cybersecurity threats.

Some provisions, such as victim refunds, took effect immediately, with all digital asset businesses required to register with the IDFPR by mid-2027, marking Illinois's assertive regulatory stance.

Illinois's cautious approach aims to balance investor protection with industry growth, amidst ongoing political debates and previous failed attempts to create a Bitcoin reserve for the state treasury.