The Illinois Senate has passed a new law aimed at protecting residents from crypto fraud. The Digital Assets and Consumer Protection Act (SB1797) was approved on April 10 with a 39-17 vote, introducing strict rules for digital asset companies operating in the state.
Senator Mark Walker, who sponsored the bill, said the law will bring much-needed transparency and accountability to an industry where “too many people have been left unprotected.”
Crypto Companies Must Register and Disclose Risks
If signed into law, all companies—whether local or remote—must register with the state before offering services to Illinois users. They’ll be required to disclose fees, insurance coverage, and explain risks like fraud or technical failures that could lead to loss of funds.
Exchanges would also need to review token listings regularly, report risk assessments, and disclose conflicts of interest.
Rules to Protect Customer Funds and Prevent Abuse
The bill makes it clear: crypto firms must keep customer assets separate from their own and cannot use them for lending or investing without consent. These funds would be protected in bankruptcy, and considered user-owned trust property.
Firms must also provide easy-to-access support, including hotlines and clear complaint handling procedures.
Why This Matters: Illinois Ranks High in Crypto Scam Victims
The law comes as Illinois grapples with a rising number of crypto scams. In 2023, the state was #6 nationwide for digital asset fraud, with over 1,900 cases reported.
Similar actions are taking place across the U.S. — California and North Dakota both introduced new bills recently to address crypto security and fraud risks.
