Illinois State Senator’s Bill Seeks to Claw Back $163 Million Lost to Crypto Fraud

With millions lost to crypto fraud in Illinois, a new bill aims to tighten regulations in the digital asset space.

On Thursday, the Illinois Senate Executive Committee passed Senate Bill 1797, the Digital Assets and Consumer Protection Act, which seeks to regulate digital asset businesses within the state.

The bill, first introduced in February by State Sen. Mark Walker (D-Arlington Heights), aims to address the mounting problem of crypto fraud, which led to over $163 million in losses in Illinois alone in 2023, as per a Thursday statement.

“The rise of digital assets has opened the door for financial opportunity, but also for bankruptcy, fraud, and deceptive practices,” Walker said, adding that, “We must set standards for those who have evolved in the crypto business to ensure they are credible, honest actors.”

The bill, which passed in an 8-4 vote, now moves to the full Senate for consideration. If approved, it will proceed to the House of Representatives for further deliberation before being sent to Governor J.B. Pritzker for final approval.

The legislation designates the Illinois Department of Financial and Professional Regulation (IDFPR) as the primary regulatory body overseeing the activities of digital asset companies.

Such companies will be required to register with IDFPR, providing necessary disclosures and demonstrating their financial stability to ensure consumer protection

A key provision of the bill mandates that companies implement safeguards for customer assets to prevent fraud and mismanagement.

Since its introduction in February, several state senators later added their support as co-sponsors to SB1797: Sen. Karina Villa on March 18, Sen. Rachel Ventura on March 19, and Sen. Michael Hastings, Linda Holmes, and Christopher Belt on March 20.

Illinois and crypto

With this new push, Illinois is taking strict steps to ensure the state’s consumers are protected in the crypto space.

In February, Sen. Dick Durbin introduced the Crypto ATM Fraud Prevention Act to protect consumers, particularly seniors, from scams involving crypto ATMs.

The bill would enforce transaction limits and require operators to offer refunds to victims who report fraud within 30 days.

Meanwhile, on the national stage, House Financial Services Committee Chair French Hill (R-AR) recently said that the personal crypto dealings of President Donald Trump and his family have complicated the drafting of legislation for the crypto sector.