Illinois Senate Drops the Hammer on Crypto Scammers with New Bill

Digital Assets and Consumer Protection Act Aims to Clean Up the Crypto Wild West

The Illinois Senate just threw down the gauntlet on crypto fraud and shady dealings, passing a bill that's set to shake up the industry. This isn't just another piece of legislation; it's a full-on assault on the crooks and scammers that have been running wild in the crypto space.

On April 10, the Digital Assets and Consumer Protection Act, or Senate Bill 1797, slammed through the chamber with a 39-17 vote. Senator Mark Walker, the mastermind behind this move, is out to put the fear of the law into crypto businesses operating in the state.

This bill isn't messing around. It's demanding that every crypto outfit, no matter where they're based, registers with the Illinois Department of Financial and Professional Regulation before they even think about doing business in the state.

SB1797 is laying down the law, requiring any firm offering digital asset services to Illinois residents to get their paperwork in order. No more hiding in the shadows for these guys.

But that's just the start. Crypto companies are now on the hook to spill the beans on their full fee structure, let users know if their assets are insured, and lay out the risks, including the nightmare scenario of losing access to funds due to fraud, outages, or security breaches.

The bill is also cracking down on the wild west of crypto exchanges. Platforms listing tokens better be ready to assess security risks, come clean about potential conflicts of interest, and keep a close eye on whether the token should even be listed in the first place.

And before they even think about listing a token, these platforms have to report to the Department of Financial and Professional Regulation about the steps they're taking to stop manipulation, price rigging, and insider-driven scams. No more shady business behind closed doors.

But wait, there's more. Businesses are now required to keep user assets separate from their own and can't touch customer funds for lending or other purposes without getting the green light first.

If a company goes belly up, those assets are legally protected and treated as trust property, not just another asset to be liquidated. It's a game-changer for protecting users' hard-earned crypto.

SB1797 isn't just about cracking down on the bad guys; it's also setting up a framework for handling complaints and providing top-notch customer service. Covered firms better have toll-free helplines and clear processes for resolving disputes and reporting fraud, or they'll be feeling the heat.

This bill comes at a time when crypto-related scams are running rampant in Illinois. Senator Walker isn't pulling any punches, stressing the need for "guidelines and accountability" to rebuild trust in the space.

Illinois is feeling the pain, ranking sixth nationwide for losses from crypto fraud in 2023, with over 1,900 complaints flooding in, according to FBI data. Scams like rug pulls and pig butchering might not be new, but the anonymous nature of crypto has made it a nightmare to catch these fraudsters.

With crypto scams and frauds exploding across the industry, states across the U.S. are stepping up to the plate with similar consumer protection measures.

Just last month, California's Assembly Member Avelino Valencia beefed up AB 1052 to expand protections for crypto payments and self-custody. Meanwhile, North Dakota's HB 1447, which passed the Senate on March 18, is targeting crypto-ATM-related fraud with stricter licensing, daily caps, and reporting rules. The crypto world is on notice: the days of operating in the shadows are over.