Key Takeaways
- • Illinois Governor JB Pritzker signed the Digital Assets and Consumer Protection Act on 18 August 2025, giving the Illinois Department of Financial and Professional Regulation supervisory and regulatory authority over digital asset exchanges and related businesses.
- • The Act requires covered digital asset businesses to register with the Department, with an initial nonrefundable application fee of US$5,000 and annual renewal requirements.
- • Registrants must maintain a surety bond or trust account with a qualified custodian, meet capital and liquidity requirements set by the Department, and report material changes within 15 days.
- • Entities regulated by the SEC or CFTC are excluded, which places the Act's focus on spot digital asset transactions, unlike New York's more limited BitLicense exclusions.
- • The same day, Pritzker signed the Digital Asset Kiosks Act to protect Illinois residents against fraud and scams tied to digital asset kiosk transactions.
Summary
On 18 August 2025, Illinois Governor JB Pritzker signed into law the Digital Assets and Consumer Protection Act, granting the Illinois Department of Financial and Professional Regulation (the Department) supervisory and regulatory authority over digital asset exchanges and businesses related to digital assets, according to K&L Gates. The Act requires certain businesses engaged in digital asset business activity in Illinois to register with the Department and establishes consumer protections aligned with those used for traditional financial services, including disclosure and custody requirements and customer service standards. On the same day, Pritzker signed the Digital Asset Kiosks Act, which targets fraud and scams connected to digital asset kiosk transactions. K&L Gates characterizes the legislation together as a major step in state-level digital asset regulation.
The Act defines digital asset business activity broadly to include the exchange, transfer, or storage of a digital asset on behalf of a customer, the administration of digital assets, and other activities the Department regulates. It excludes software development, non-fungible token issuance, peer-to-peer transfers, decentralized exchange activity conducted solely through automated protocols, and blockchain operations such as transaction validation and node operation. Covered persons include out-of-state businesses that serve Illinois residents, defined to include those domiciled in the state, physically present for more than 183 days in the prior year, with a place of business in Illinois, or acting as legal representatives of Illinois domiciliaries. Notably, the Act exempts activities overseen by the SEC or CFTC, as well as federally insured depository institutions, corporate fiduciaries, and merchants using digital assets for ordinary-course purchases. K&L Gates notes that this structure contrasts with New York's BitLicense regime, which contains narrower exclusions, and that the Act appears aimed at spot digital asset transactions.
Registrants must pay a nonrefundable US$5,000 application fee and submit financial statements, fingerprints of executive officers and responsible individuals, and a surety bond or trust account in an amount set by the Department. Registration renews annually and requires financial statements, volume and custody metrics, and evidence of custody, capital, and liquidity compliance. Covered persons must maintain written compliance programs covering cybersecurity, business continuity, disaster recovery, anti-fraud, AML/CFT, operational security, and conflicts of interest, among others. The Department may examine covered persons, affiliates, and certain service providers at any time, with a US$150 examination fee plus travel costs. Records must be retained for five years, and records kept outside Illinois must be produced within three days of a Department request. Material changes must be reported within 15 days, with prior approval required for certain control-person changes or mergers. The Department may also set and raise capital and liquidity requirements, considering factors such as asset composition, liabilities, transaction volume, and product mix.
The Act defines digital asset business activity broadly to include the exchange, transfer, or storage of a digital asset on behalf of a customer, the administration of digital assets, and other activities the Department regulates. It excludes software development, non-fungible token issuance, peer-to-peer transfers, decentralized exchange activity conducted solely through automated protocols, and blockchain operations such as transaction validation and node operation. Covered persons include out-of-state businesses that serve Illinois residents, defined to include those domiciled in the state, physically present for more than 183 days in the prior year, with a place of business in Illinois, or acting as legal representatives of Illinois domiciliaries. Notably, the Act exempts activities overseen by the SEC or CFTC, as well as federally insured depository institutions, corporate fiduciaries, and merchants using digital assets for ordinary-course purchases. K&L Gates notes that this structure contrasts with New York's BitLicense regime, which contains narrower exclusions, and that the Act appears aimed at spot digital asset transactions.
Registrants must pay a nonrefundable US$5,000 application fee and submit financial statements, fingerprints of executive officers and responsible individuals, and a surety bond or trust account in an amount set by the Department. Registration renews annually and requires financial statements, volume and custody metrics, and evidence of custody, capital, and liquidity compliance. Covered persons must maintain written compliance programs covering cybersecurity, business continuity, disaster recovery, anti-fraud, AML/CFT, operational security, and conflicts of interest, among others. The Department may examine covered persons, affiliates, and certain service providers at any time, with a US$150 examination fee plus travel costs. Records must be retained for five years, and records kept outside Illinois must be produced within three days of a Department request. Material changes must be reported within 15 days, with prior approval required for certain control-person changes or mergers. The Department may also set and raise capital and liquidity requirements, considering factors such as asset composition, liabilities, transaction volume, and product mix.
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