Illinois has become the first state in the US Midwest to bring in strict laws to protect cryptocurrency users, with Governor JB Pritzker taking aim at what he calls Donald Trump’s “crypto bros” approach to policymaking. The move comes as the debate over digital asset regulation divides states along political lines, with Republicans largely backing growth and Democrats pushing for tighter rules.

A Landmark Law for Digital Assets

On Monday, Governor Pritzker signed two major bills into law. The first, The Digital Assets and Consumer Protection Act (SB 1797), gives the Illinois Department of Financial and Professional Regulation new powers to oversee cryptocurrency exchanges and businesses.

The Act sets out clear requirements for crypto firms, including:

• Holding sufficient financial reserves.
• Implementing cybersecurity and anti-fraud systems.
• Providing transparent investment disclosures.
• Following customer service standards similar to those in traditional finance.

Pritzker said the laws were about protecting ordinary people at a time when federal protections are being eroded. “At a time when fraudsters continue to evolve, and consumer protections are being eroded at the federal level, Illinois is sending a clear message that we won’t tolerate taking advantage of our people and their hard-earned assets,” he said.

The legislation passed through the state Senate back in April before reaching the governor’s desk. With this move, Illinois becomes the first Midwestern state to formally regulate the industry in this way.

Cracking Down on Crypto ATMs

Alongside the Digital Assets Act, Pritzker also signed the Digital Asset Kiosk Act (SB 2319), targeting cryptocurrency ATMs, often called kiosks. These machines, found across Illinois, have been linked to high fees and scam-related transactions.

The new law requires ATM operators to:

• Register with state regulators.
• Provide full refunds to scam victims.
• Cap fees at 18% per transaction.
• Limit daily transactions to $2,500 for new users.

Representative Edgar Gonzalez Jr, who supported the bill, said: “The people of Illinois deserve reliable, consistent safeguards, no matter the financial service they utilise for their hard-earned money.”

The move comes after alarming figures revealed Illinois ranked fifth in the country for crypto fraud losses in 2024, with victims losing a combined $272 million.

Trump in the Firing Line

Beyond the bills themselves, Pritzker used the occasion to attack Donald Trump’s record on crypto. His office accused the Trump administration of “actively deregulating the crypto industry at a time when consumers are increasingly at risk of fraud.”

Earlier this year, Trump signed legislation overturning an Internal Revenue Service rule that expanded the definition of a broker to include decentralised finance (DeFi) exchanges. Critics argued this weakened oversight and opened the door to more risky practices.

“While the Trump Administration is letting crypto bros write federal policy, Illinois is implementing common-sense protections for investors and consumers,” Pritzker said during the bill signing.

The governor’s sharp comments highlight how crypto has become a partisan issue, with Republican-led states such as Texas and Arizona embracing the industry, while Democratic states like Illinois are taking a more cautious, consumer-first approach.

Illinois Rejects Bitcoin Reserve

Earlier in 2024, Illinois lawmakers also voted down a proposal to create a state-level Bitcoin reserve. The bill, introduced by Representative John Cabello, would have allowed the state treasury to buy and hold Bitcoin for five years as part of its financial reserves.

The plan was ultimately rejected at the committee stage, signalling that Illinois lawmakers were not ready to treat Bitcoin as a safe long-term asset for public funds.

What This Means for the Industry

Illinois’ new laws set an important precedent in the Midwest, sending a strong message that consumer protection must come before industry growth. By focusing on both exchanges and crypto ATMs, the state aims to cut down on fraud and make digital assets safer for ordinary users.

However, the political backdrop means the debate is far from over. With Trump and his allies pushing for looser rules and states like Illinois moving in the opposite direction, the US is likely to see a patchwork of different approaches rather than a single national standard.

For crypto companies, this creates challenges. They will need to comply with stricter requirements in states like Illinois while enjoying lighter regulations in Republican-led states. For consumers, though, the new rules may offer more confidence when engaging with crypto in Illinois.

As the 2026 presidential election looms and Trump positions himself as a pro-crypto candidate, the clash between federal deregulation and state-level safeguards could define the next chapter of America’s crypto story.