On August 18, Illinois Governor JB Pritzker announced the signing of two measures establishing comprehensive digital asset safeguards. The Digital Assets and Consumer Protection Act (SB 1797) and the Digital Asset Kiosk Act (SB 2319) create a licensing and supervisory framework for digital asset businesses and impose specific protections for cryptocurrency kiosk users.
Both measures expand the authority of the Illinois Department of Financial and Professional Regulation (IDFPR) and introduce statutory consumer protections designed to reduce fraud and misuse in digital asset markets. SB 1797 establishes oversight of exchanges, custodians, and other digital asset businesses, while SB 2319 creates specific rules for kiosk operators, including limits on transaction amounts and mandatory refund rights for scam victims.
The new framework includes several key provisions:
- Licensing and supervision of exchanges and custodians. Under SB 1797, digital asset businesses must register with IDFPR to engage with Illinois residents. The law gives IDFPR full supervisory authority, including examinations, assessments, and enforcement powers, with penalties of up to $100,000 per day for unlicensed activity.
- Customer disclosures and custody requirements. SB 1797 requires covered entities to provide initial and transaction-level disclosures, publish outage histories, and clearly state whether customer assets are insured. Firms must segregate and fully back customer assets, which are held in trust and cannot be loaned out or used in insolvency.
- Transaction caps and fee limits for kiosks. SB 2319 imposes immediate daily limits of $2,500 for new customers and $10,500 for existing customers. The law also caps transaction charges at the greater of $5 or 18% of the transaction value.
- Anti-fraud obligations for kiosks. Under SB 2319, operators must maintain written anti-fraud policies, use blockchain analytics to block suspicious wallets, and provide live customer service during kiosk hours.
- Refund rights for scam victims. SB 2319 entitles new customers to full refunds for up to three fraudulent transactions in their first week or first three transactions, if reported within statutory timeframes and supported by a police or government report. Existing customers may recover all fees under similar conditions
Putting It Into Practice: Illinois joins the growing list of states establishing licensing and supervisory framework for digital asset businesses (previously discussed here and here). While SB1797’s licensing requirements are deferred until 2027, SB 2319 imposes immediate obligations, including fee caps, transaction limits, and mandatory refunds. As states are continuously stepping in to establish framework for licensing and kiosks (previously discussed here), firms offering digital asset services should prepare for a patchwork of state-level requirements.